'New possibilities' have emerged to form Italian government, says PM-designate

Standoff drags on in Italy over new economy minister

Referring to polls that indicate that Italy's populist parties are likely to win any snap election called this year, they continued, "The entry into office of an Italian government that is on a confrontational course with the European Union and disregards its rules is only postponed".

But if parliament fails to approve his government, a new election would be held "after August" - the most likely outcome given only the centre-left Democratic party has announced that it would vote in favour.

If a coalition can not be formed, the country will again hold elections, with the president having to dissolve parliament and host a vote as early as July 29, if most of the major parties have their way.

The 5-Star Movement and the right-wing League abandoned their bid to take power in a coalition after President Sergio Mattarella vetoed their choice of 81-year-old eurosceptic Paolo Savona as economy minister.

President Mattarella then appointed former International Monetary Fund official and pro-euro Carlo Cottarelli as interim prime minister ahead of proposed fresh elections in September.

Finally, they agreed on Giuseppe Conte, a law professor, as the recommendation to President Sergio Mattarella to lead the Council of Ministers, after both parties held internal polls to vindicate support for their program.

"It is hard because. the people who want to sort out problems affecting everyday citizens have their hands tied by stronger political forces", said retired Rome resident Mauro Ciarpagnini, adding that the President should not have rejected Mr Savona.

Assembling a Cabinet acceptable to both Mr Mattarella and the populist partners foundered on League leader Matteo Salvini's insistence on a Eurosceptic economy minister.

The prospect of fresh elections rattled financial markets, with investors anxious the vote could become a de facto referendum on Italy's euro membership.

His appointment comes days after efforts by the Five Star and the League to form a coalition government collapsed.

Mattarella's decision sparked an unprecedented institutional crisis, with strong opposition being mounted by the 5 Star Movement and the League, which garnered more than 50 per cent of the votes in the March 4 national elections.

Five Star leader Luigi Di Maio called on parliament to impeach the mild-mannered Mattarella, while League chief Matteo Salvini threatened mass protests unless snap elections were called.

However, an administration led by Mr Cottarelli would likely only be a short-term solution because the majority of parliamentarians have said they would not support a technocrat government.

After that, Mattarella would dissolve Parliament and set elections for 2019, Cottarelli said.

A successful move by the Italian president to push back against populist and euroskeptic forces, leading to the last-minute downfall of their plans to form a government.

Savona has frequently advocated that Italy leave the euro, describing the single currency in a recent book as a "German cage."

Most analysts however say such calls have little chance of success as impeachment is only possible in cases of "high treason" or constitutional breaches.

Di Maio has proposed moving contested ministerial candidate Paolo Savona to a different Cabinet post.

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