Italy’s Populists May Give Talks Another Shot, as Uncertainty Lingers

ROME — If at first, or second, you don’t succeed, try, try, try again. That was the lesson from Italy’s populist parties Wednesday. After the collapse of their attempt to form a government earlier this week, they were back at the drawing board, and on the campaign trail, giving it another go.

The fact that President Sergio Mattarella had vetoed their euroskeptic choice for a key Cabinet position, and that global markets sank with fears about instability in the European Union’s fourth largest economy, was apparently no deterrent for the populist Five Star Movement and League party.

Nor was the fact that Mattarella had only days ago called on Carlo Cottarelli, a former International Monetary Fund official and spending hawk, to form a technical government to guide Italy to a new election.

Cottarelli, who is unlikely to win a confidence vote in Parliament, had an informal meeting with Mattarella in the Quirinal Palace. But instead of presenting a list of Cabinet picks, he apparently decided to hold off to see if the parties that won a majority of the votes at elections in March could find a way out of their impasse.

“New possibilities for the birth of a political government have emerged,” a source close to Cottarelli told the Italian news agency ANSA late Tuesday night. “He is waiting for developments.”

Those developments were still developing Wednesday afternoon, but they seemed to reflect a significant shift of power within the populist alliance.

Luigi Di Maio, the political leader of the Five Star Movement, has steadily shed political capital and seemed desperate for the new talks. It did not help Di Maio that he had called for the impeachment of the president and a mass mobilization and social media campaign against him.

Nevertheless, he signaled a new openness to fresh consultations with Mattarella and their alliance’s original choice for prime minister, Giuseppe Conte.

Talking to reporters after a political rally Tuesday night, Di Maio said, “We remain available to collaborate also with the president of the republic, maintaining a coherent, but collaborative position to be able to solve the current crisis that we are living.”

He also said: “There are two paths ahead. Either we launch the Conte government with a reasonable solution or we vote right away.”

Late Wednesday afternoon, Di Maio had an informal meeting with Mattarella. It is not clear what they discussed.

Matteo Salvini, the leader of the League, who entered the alliance with the Five Star Movement as a junior partner earlier this month, now seems in the driver’s seat.

With his support skyrocketing over the course of the more than 85 days of negotiations, he continued to call for a new election as he hit the campaign trail in Pisa on Wednesday.

But simultaneous negotiations with the Five Star Movement seemed to center on a top official in his party, Giancarlo Giorgetti, taking the position of prime minister. The Five Star Movement, reluctant to give up its primacy in the alliance, is resisting, according to reports in the Italian press.

The very notion of a government taking power in Italy seemed to assure the markets after Italian bonds, especially short-term ones, plummeted in the markets. The fears of new elections leading to an exit from the euro prompted the most dramatic dip in two-year yields in more than 20 years.

But Paolo Savona, the euroskeptic that economics minister Salvini had insisted on, and whom Mattarella refused to accept, remained a sticking point.

“It is stunning that Paolo Savona, a person of great cultural depth and political sensitivity, still hasn’t come to the decision to take a step back,” Laura Castelli, a member of Parliament with the Five Star Movement, said Wednesday.

Central to the populists’ case for receiving a mandate from Mattarella is their assertion that they never wanted to leave the euro. “If the markets fear that Italy leave the euro, it’s because someone put around that rumor that this government wanted to leave the euro, but our will was never that,” Di Maio said Tuesday.

But the internet is rife with examples of Di Maio, his party’s founder Beppe Grillo and other top Five Star officials calling either for a referendum on the euro or for leaving the currency outright. In one video, a dejected young Italian looks sadly at the euro in his hand and tosses it into a fountain. He then imagines all the buying power he’d have with a 1,000 lire bill. Then the camera focuses on high-heeled boots moving toward him on the cobblestones and scans up to reveal a top Five Star official, Paola Taverna, appearing like a fairy godmother. She turns the euro in his hand into that 1,000 lire bill, and tells him that the Five Star Movement can make his dreams come true and it is “possible to leave the euro.” A thousand lira would be valued at a fraction of a euro.

Salvini said this week that neither he, nor his pick for finance minister, wanted to leave the euro. But in prior interviews, Salvini has clearly stated he wanted Italy out of the euro and has even failed to rule out leaving the European Union.

In a 2016 interview with the Times, Salvini said, “Leave the euro? Surely yes. Tomorrow morning. Once the monetary sovereignty is retaken, one can make a last attempt to renegotiate all of the treaties, Maastricht, Schengen, Dublin and Lisbon.” Those treaties are the lifeblood of the European Union.

Amid a remarkably fluid and high-stakes situation, Italian analysts contemplated a variety of outcomes. Anything seemed possible for the moment and if Mattarella decided that the country should go to new elections, either this summer or in early fall, it was not clear what the alliances would be.

If Five Star and the League entered into new elections as an alliance and vowed not to leave the euro, which is still relatively popular in Italy, they were nearly assured a landslide victory.

If they joined together to run against the euro, they would still have a good shot at winning, triggering perhaps the greatest crisis in the history of the European Union and, many of the bloc’s leaders fear, the potential collapse of its currency and the continent’s economy.

The League would also have the flexibility to reunite with former Prime Minister Silvio Berlusconi in the center-right coalition with which it ran in March, but this time its nearly 30 percent of the vote, according to recent polls, would make it the undisputed leader of that alliance.

Speaking at one of his many campaign events across Italy on Wednesday, Salvini kept telling his supporters that one way or another, the League would end up in the government. But, he said, “my patience is at the limit.” He was not alone.