Italian parties in talks as prospect of snap elections looms

ROME • Italy's political parties are readying for possible snap elections, even as some of them redouble efforts to convince Prime Minister Mario Draghi to rethink his determination to resign.

While talks to patch up the current majority or form a new one continue, Italy's political groupings are making preparations for a potential vote, several party and government officials said, asking not to be named discussing confidential deliberations.

Elections could be held on Sept 25, according to Democrat leader Enrico Letta, who is among those trying to salvage Mr Draghi's government.

Mr Draghi had blamed a breach of trust with his broad but fractious coalition when he offered to resign last Thursday in a decision that convulsed Italian markets by raising the spectre of fresh political turmoil.

While the former central banker so far appears unmoved by efforts to get him to change his mind, he will be in Parliament on Wednesday at President Sergio Mattarella's request to address lawmakers.

A resignation by Mr Draghi would pitch Italy into disarray just as Europe contends with a brewing energy crisis fomented by Russia's invasion of Ukraine.

At the same time, any fresh political turmoil would come at a complex juncture for the euro area, amid growing concerns about looming recession, even though the Italian economy has been faring better than its peers.

Early elections would also hamper deliberations over Italy's 2023 budget, a process that usually dominates parliamentary proceedings during autumn.

Efforts to convince Mr Draghi to stay on must take account of the terms that he himself set before the leader of the Five Star Movement, Mr Giuseppe Conte, sparked the current crisis by boycotting a confidence vote.

Mr Draghi has made clear he would not lead a new government that does not include Five Star.

Speaking last Saturday evening, Mr Conte appeared to lay the blame for the impasse squarely on Mr Draghi, saying that the prime minister had offered only "generic answers" to Five Star's requests for more social spending.

Without concrete plans to address those issues, "we won't be able to shoulder any government responsibility", Mr Conte said.

The centre-right bloc is the grouping that could benefit most if a vote ends up getting called for autumn.

It includes Ms Giorgia Meloni's Brother of Italy party, which currently tops the polls and is the only major party not backing Mr Draghi, as well as Mr Matteo Salvini's League.

Mr Antonio Tajani, a former European Parliament president who leads Mr Silvio Berlusconi's Forza Italia, last Saturday appeared to implicitly back early elections by urging Mr Draghi to stay on in power without Five Star. That is something the former European Central Bank president has made clear he would not do.

Mr Conte's Five Star appears divided between those who want to patch up the rift with Mr Draghi and those who want a full break with the government in an attempt to revive the movement's moribund electoral fortunes.

Meanwhile, Mr Letta's Democrats and other minor centrist parties are still betting that Mr Draghi can be persuaded to stay on. Former premier Matteo Renzi said in an interview published by Il Messagero newspaper yesterday that he was working "day and night to form a new government led by Draghi".

Dr Veronica De Romanis, a professor at Luiss university in Rome, thinks those efforts can still bear fruit. "With a war, inflation and the European Central Bank's monetary tightening, the party that leaves the government would impose a huge burden on the country," she said. "Draghi won't leave in the end as he would end up being on the wrong side."

BLOOMBERG