Advertisement

Five Star Meltdown Adds to Italy Tensions as Leader Set to Quit

(Bloomberg) -- Luigi Di Maio appeared poised to resign as leader of Italy’s insurgent Five Star Movement, triggering a bond sell-off and adding to political uncertainty as the country heads to regional elections this weekend.

Di Maio may step back ahead of the party’s likely defeat in elections in Emilia Romagna and Calabria on Sunday, according to a person familiar with the matter who asked not to be named discussing confidential deliberations. Di Maio will likely stay on as foreign minister, the person said.

Leaders of Five Star, the senior party in Italy’s fractious coalition government, are meeting Wednesday morning to discuss Di Maio’s plan to resign, Italian newspapers reported. An announcement could come as part of a scheduled party event at 5 p.m.

The yield on Italy’s 10-year debt climbed as much as eight basis points. The FTSE Italia All-Share Banks Index dropped 1.4%, with UniCredit SpA losing 2.4% and Intesa Sanpaolo SpA slipping 0.9%.

Vito Crimi, a senior Five Star lawmaker, or Justice Minister Alfonso Bonafede may become the party’s provisional leader, daily La Stampa reported.

For Di Maio, the beginning of the end came at a luxury hotel by the ancient Forum in Rome.

The 33-year-old leader of the populist Five Star movement was taken to task by its founder, Beppe Grillo, a former comic more than twice his age, who told him to stop picking fights with his government partners in the Democratic Party, according to party officials who asked not to be named.

The Italian media has speculated that, in pulling out before an electoral debacle, Di Maio may be hoping for an eventual return as leader of a reorganized Five Star. But his party’s convulsions may sound the death knell for a fragile coalition stitched together with the sole purpose of keeping Matteo Salvini’s nationalist League out of power.

Five Star and the Democrats both want to avoid an electoral clash with the resurgent League. But voices in both parties also argue that if a vote is unavoidable, they’d be better off pulling the plug on the coalition before it drags them down.

Di Maio’s position has also been undermined by mass desertions of Five Star lawmakers and voters alike. Support for the party has slumped to 16% in recent polls, compared with the 33% it posted when it won the 2018 election. The Democrats are at 19% while the League has 31%Since the party signed up for Prime Minister Giuseppe Conte’s second coalition in September, more than 20 lawmakers have abandoned Five Star or been kicked out. Three senators switched to the League in December, and the education minister quit before ditching the party. Another senator was expelled in January after he failed to follow the party line on the budget. Two more lawmakers quit Tuesday.

Of those who remain in Five Star’s parliamentary caucus, many are openly discussing changes in the leadership. The Democrats, meanwhile, are asking how much longer they can afford to be linked to such a dysfunctional partner.The rifts are on display in the 17th century Roman palace that houses the lower house of parliament where the tribes of the Five Star Movement regularly gather in a patio flanking the debating chamber to chat, to smoke, and to plot.Dotted around the central fountain you can see the separate huddles -- some pro-coalition, others anti-Di Maio, and some who want a return to the party’s first alliance with the right-wing populists of the League.

One Democratic lawmaker who watches the Five Star cliques across the courtyard complains the anarchy inside his party’s coalition partner makes it hard to pin them down even on basics of legislating.

Five Star is in such desperate straits that even the Democrats have gotten involved in trying to establish a degree of stability, the deputy added. The Democratic leadership has been issuing regular warnings that the coalition can only continue if it gets things done.Indeed, Democratic Party officials suspect that some within Five Star, including Di Maio, have been echoing Salvini’s anti-European, anti-immigration rhetoric with an eye to ditching the Democrats and reviving their previous coalition.That’s a scenario dismissed by Five Star officials, who say the party is committed to the coalition. But they are struggling to convince anyone they can make good on that commitment.

--With assistance from Dana El Baltaji.

To contact the reporters on this story: John Follain in Rome at jfollain2@bloomberg.net;Jerrold Colten in Milan at jcolten@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Karl Maier, Alessandro Speciale

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.