Italy scrambles for political solution with new vote on horizon

League boss mulls new poll to end Italy stand-off

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 the two populists, Di Maio and Salvini, were expected to back down on their earlier insistence that the 81-year-old Eurosceptic Paolo Savona, who had called Italy's adoption of the euro a "historic mistake", serve as finance minister.

Sergio Mattarella, the Italian president, who would have to formally approve the new government's leader and slate of ministers, signalled on Wednesday evening that he was ready to install a technocratic government if a deal could not be reached, but made a decision to give Di Maio and Salvini more time to draw up a list of ministers that could be accepted by all parties. Several rounds of post-election talks with part leaders collapsed amid a mesh of seemingly irreconcilable demands.

Adding an element of constitutional risk, members of the Five Star party subsequently called for Mattarella's impeachment for betraying the Italian people.

No such luck. Mattarella rejected the coalition's choice of Paolo Savona, a controversial Euro-skeptic professor, as minister of the economy.

The former International Monetary Fund official said he was deeply honored by the task, and would put his best efforts in the bid.

Cottarelli said Italy would face new elections "after August" if parliament did not endorse his team, a near certainty given that Five Star and the League together hold a majority.

As a director to the IMF's fiscal affairs department from 2008 to 2013 he became known as "Mr Scissors" for prescribing public spending cuts during the short-lived center-left government led by Enrico Letta.

Cottarelli, a 64-year economist, was given the mandate to form a technocrat cabinet on Monday, after a bid of two populist parties failed following the president's veto to appoint their nominee for finance minister.

A day after the possibility of a governing coalition between the anti-establishment Five Star Movement and the right-wing League was revived, League leader Matteo Salvini cancelled appointments in northern Italy to travel to Rome.

Mattarella welcomed the proposal, according to his staff. League leader Matteo Salvini, who is surging in opinion polls, seemed cool on the idea but did not rule it out.

Analyst Codogno said signals that the Democratic Party, which led Italy's last government, wouldn't vote in favor of a Cottarelli-led administration during mandatory confidence votes had dimmed its chances.

"Why don't we just say that in this country it's pointless that we vote, as the ratings agencies, financial lobbies decide the governments", a livid Di Maio said in a video on Facebook.

Five Star and the League won 33 per cent and 17 per cent of votes respectively in the March election. Indeed, on Wednesday, he called for snap elections and claimed that he did everything he could to help resolve this political impasse but it was never enough for President Mattarella. "Then parliament would be dissolved with elections at the beginning of 2019", Cottarelli said.

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

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