- Associated Press - Sunday, August 25, 2019

ROME (AP) - Italy’s economy minister tried to reassure financial markets and citizens as the nation’s political leaders struggled Sunday to form a new government hoping to avoid early elections that could bring nationalist Matteo Salvini and his hard-right forces to power.

Giovanni Tria, non-partisan economy minister in the just-collapsed populist coalition, predicted in an interview in Sunday’s Corriere della Sera newspaper that Italy’s 2020 deficit will be less than feared.

Tria was quoted as saying that even without additional measures, the deficit for next year will be “substantially lower than the 2.1 percent of GDP predicted” in the budget plan that Premier Giuseppe Conte’s government envisioned in spring 2019.

Tria insisted there’s “room to maneuver” to avoid an automatic sales tax hike that would punish Italy’s long-ailing economy. He argued that two campaign promises that the populist government had enacted — a guaranteed minimum income and an early retirement possibility for workers — had cost less than feared.

He also cited greater revenues and lower interest on Italy’s staggering public debt as he dismissed as “foolishness” talk of recession and “plunges in consumption” by consumers.

Salvini triggered the collapse last week by yanking the support of his right-wing League party, which has governed since June 2018 together with the anti-establishment 5-Star Movement.

Whoever governs this fall will have to make painful budget cuts to meet European Union expectations just as Salvini campaigns to be premier on pledges that he’ll put “Italians first” ahead of EU interests.

The 5-Stars and the opposition center-left Democrats were scrambling in closed-door discussions to see if they can cobble together a coalition, despite sharp differences on who would be premier.

Democratic Party chief Nicola Zingaretti challenged the 5-Stars to agree to a government whose planks would be a clear break with those of the coalition that just collapsed.

“Italians just wouldn’t understand a mishmash” of the last government that failed, Zingaretti told reporters Sunday evening.

“We’ll do everything to try to find a possible solution, which, I won’t deny, at this point hasn’t been found,” Zingaretti said. He called on the 5-Star leaders to meet with Democrats on Monday to make some progress.

President Sergio Mattarella on Thursday said party leaders had asked for more time for negotiations for a coalition government that can win a mandatory confidence vote in both chambers of Parliament.

But while he made clear it was his duty to see if this Parliament could continue under some solid government, Mattarella said Italians and financial markets need answers soon. If he doesn’t get them, starting with a new round of talks with party leaders this week, Mattarella will dissolve Parliament and set new elections this fall, some 3 ½ years early.

Meanwhile, Salvini, worried that his coalition pullout might not give him the early elections he sought, has dangled the possibility of a return to governing with the 5-Stars, even suggesting another coalition headed by Conte.

But Conte, who is now caretaker premier, told reporters Saturday in France, when he arrived for the G-7 Summit, that a government with the League “for me is a political experience that’s finished.”

While Italy has seen dozens of short-lived governments, this political crisis is particularly worrisome, as populist and pro-sovereignty movements gain steam in Europe, challenging the EU’s decades-old identity as a staunch Western and NATO ally.

Noting that Conte’s government had been “the laboratory of populism on the Old Continent” of Europe, La Stampa daily’s editor-in-chief Maurizio Molinari wrote in a front-page commentary that whether the 5-Stars, Parliament’s largest party, choose to govern with the Democrats will indicate if the populists are moving toward the center.

The 5-Star leader Luigi Di Maio has the opportunity, with a viable deal with the Democrats, to “guide the moderate transformation of a great populist force, creating an important precedent in Europe,” or, if not, “Italian populism will remain in the grove of the extremes,” Molinari said.

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Frances D’Emilio is on twitter at www.twitter.com

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