Italy's Berlusconi Gives Green Light to a Populist Government


The chances of a populist government ruling Italy received a sizable boost from Silvio Berlusconi as he dropped his opposition to a tie-up which is likely to alarm financial markets.

After more than two months of maneuvering between the anti-establishment Five Star Movement and the anti-immigrant League, four-times premier Berlusconi yielded to pressure, including from his own lawmakers, and pledged that he is open to the two parties governing together.

President Sergio Mattarella has given the two populist forces until Thursday afternoon to decide whether they can forge a majority. Efforts so far had been thwarted by Five Star Leader Luigi Di Maio’s demand that League head Matteo Salvini drop his alliance with Berlusconi’s Forza Italia.

Berlusconi was forced from office at the height of the financial crisis and had been expected to make his latest comeback in the March 4 election. Instead, his party was overtaken by the League, handing Salvini control of their center-right alliance, the biggest group in the legislature.

Berlusconi said in a statement on Wednesday night that he would not veto a Five Star-League administration, and would support measures which are in line with the policies of the center-right bloc.

Salvini responded by thanking Berlusconi, saying “we must now work on the program, timings, the team and the things we have to do. Either we reach a deal quickly, or we vote.” Di Maio said he planned to meet Salvini on Thursday. “We’ll start with the issues and then we’ll move on to names” of ministers, he said.

The 81-year-old Berlusconi, who had previously opposed a Five Star-League tie-up, said he would respect a decision of “another political force of the center-right to create a government with Five Star.” He added: “We would not impose vetoes or pre-conditions.”

Berlusconi said he would not back a parliamentary vote of confidence for such an administration “but we would calmly and without prejudice assess the work of the government.” He said his party would “loyally support” laws in line with the center-right’s program. He added that his stand did not mean the end of the center-right bloc.

Berlusconi’s green light is a key step toward a populist government, but the parties involved have yet to agree on a premier, cabinet ministers and priority policies.

A populist-led government has been described by some as an investor’s nightmare because the two parties’ spending policies are seen as insufficiently funded, while they plan to scrap a pension reform and seek an overhaul of European Union treaties.

The spread between Italian 10-year bonds and similarly dated German bunds reached 132 basis points Wednesday, the widest since late March.



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