Giuseppe Conte, the Five Star leader, said he could no longer support Draghi’s cross-party government, which he accused of not doing enough to help families facing rising food and energy costs. He said at a meeting late on Wednesday that the Five Star party – the second largest in parliament – would boycott Thursday’s vote on a 26 billion euro package aimed at protecting Italians from the effects of worsening inflation. “I have a strong fear that September will be a time when families will be faced with the choice of paying the electricity bill or buying food,” Conte said after a day of frantic political consultation. Draghi is expected to hold an emergency meeting with President Sergio Mattarella and may offer to resign. Draghi has repeatedly said he would only lead a government of national unity and would not continue without Five Star, which was the largest party in parliament until a dramatic split last month. But Mattarella, who was reluctantly persuaded to accept a second term as president in January, will play a crucial role in determining what happens next. Italian shares sold off on Thursday morning, with the FTSE index of shares in the country down more than 1%. The yield on Italy’s 10-year government bond rose 0.16 percentage points to 3.3%, sending the gap with German 10-year yields to a monthly high, as investors demand a rising premium to hold Italian debt. The collapse of the national unity government, which could trigger early elections set for spring next year, would come at a sensitive time for Italy, which is expected to be the biggest recipient of the 750 billion euro recovery fund. of the EU on Covid. A government collapse would raise doubts about Italy’s ability to pass its budget in the autumn and implement crucial reforms to accelerate the country’s long-term growth trajectory – on which the dispersal of EU money depends. EU Economy Commissioner Paolo Gentiloni told Italian media that Brussels was watching the political crisis “with anxious surprise”. Draghi, the former European Central Bank president credited with saving the euro during the 2010 eurozone crisis, was tapped by Mattarella last year to become prime minister to lead the country still reeling from the pandemic. As prime minister leading a cross-party government of national unity, he was credited with helping revive the battered economy and overseeing effective vaccine development. But Rome’s response to the Russian invasion of Ukraine has sparked new political tensions, given that Italy has historically maintained close ties with Moscow. Draghi has taken a strong stance against the invasion and has been a driving force in pushing for tough EU sanctions against Moscow. His foreign minister, Luigi Di Maio, a member of the Five Stars, stood firmly behind him. But Conte, who preceded Draghi as prime minister, questioned whether military aid to Ukraine was simply perpetuating the war. Tensions finally erupted last month when Di Maio quit Five Star, taking about a third of the party’s MPs with him and reaffirming support for Draghi’s government. Amid speculation of Five Star’s imminent exit from government, Conte met Draghi last week and laid out several political demands, including canceling a controversial waste-to-energy plant proposed for the capital, Rome, to help the worsening of the garbage crisis. However, he said the government did not respond to his demands. “We are absolutely willing to have a dialogue, to make our constructive contribution to the government, to Draghi, but we are not prepared to write a blank check,” Conte said on Wednesday night. In parliament on Thursday, Five Star lawmakers accused Draghi of trying to dismantle some of his flagship populist welfare initiatives, including a citizen’s income program and public funding for housing improvements. Other parties said they could call for early elections and that it was untenable for Draghi to remain in power if Five Star left. “If a coalition party doesn’t support a government decree, that’s enough, it seems clear that we have to go to elections,” said Matteo Salvini, head of the right-wing League.
