Italy may require early elections to break a political deadlock, government sources indicated on Friday, after Prime Minister Mario Draghi resigned in the aftermath of a coalition partner’s rebellion.

On Thursday, President Sergio Mattarella rejected Draghi’s resignation and requested him to address parliament next week in order to have a better understanding of the political situation. 

If government unity cannot be restored quickly, the only option would be to call an election in the fall, Foreign Minister Luigi Di Maio said, warning that an early vote would be welcomed by Russia but would harm Italy’s economy.

“If Draghi falls, we vote,” he told RTL radio, adding that if Italy does not have a fully functional government in the next months, it risks losing billions of euros in European Union post-pandemic recovery money and would be unable to implement steps to tackle rising energy prices.

“The Draghi government and the coalition that supported it must continue, but right now I see it as very, very difficult.”

Draghi’s 18-month-old administration has been thrown into disarray by the populist 5-Star Movement, which skipped a parliamentary confidence vote on Draghi’s initiatives to combat rising living costs on Thursday, claiming they were insufficient.

Critics argue that the party, which was ripped apart by a rift last month, was acting only for self-interest, eager to rebuild its reputation with voters after a drop in polls.

Political uncertainty has alarmed financial markets, with the premium Italy pays over German debt reaching a one-month high on Friday.

Underscoring such fears, European Central Bank policymaker Olli Rehn warned Italy might be especially hard affected by a European energy crisis in the aftermath of its political upheaval, praising Draghi for bringing “much-needed stability, perseverance and firmness to Italian decision-making.”

“It may be that we will see a very difficult period in Italy.” Rehn stated in his home Finland. 

Source: Reuters

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