Updated: Ruling Italian coalition reaches deal over public tenders, in sign of improved relations

Italian Prime Minister Giuseppe Conte looks on as he holds a news conference at Chigi Palace in Rome, Italy, June 3, 2019. REUTERS/Remo Casilli

Italy’s ruling parties, the League and 5-Star Movement, reached a deal on Tuesday over an overhaul of convoluted public tender rules in a sign that the coalition government is finally overcoming weeks of infighting.

The accord came the day after Prime Minister Giuseppe Conte threatened to quit unless the two parties stopped their constant feuding, pushing the government to the edge of collapse just a year after it was formed.

Spurred on by his ultimatum, the leaders of the League and 5-Star, Matteo Salvini and Luigi Di Maio, spoke by telephone for the first time in weeks, looking to put an end to the mutual recriminations and public dissent.

“The return to dialogue is a good sign,” Conte’s office said in a brief statement.

Relations between the two coalition parties deteriorated dramatically in the build-up to last month’s EU parliamentary election, which saw the League become Italy’s most popular party while the 5-Star lost half its support in barely a year.

Since the vote, the League’s Salvini has been behaving as the de facto prime minister, promising major tax cuts and demanding changes to European Union budget rules that impose limits on the debt and deficits run up by governments.

The deal over public work contracts was the first sign that the two parties were willing to forge ahead with their often troubled partnership.

“You see, we have survived another day,” said a youthful 5-Star parliamentarian after the accord was announced.

League politicians had criticised the current tender code, which is hugely complex in an effort to shut out mafia businesses, as a hindrance to the lacklustre economy and demanded it be suspended for two years.

5-Star rejected the proposal as “stupid” and Transport Minister Danilo Toninelli accused the League of wanting to use the dispute as a pretext to bring down the government.

In the end, the two parties agreed to a freezing of certain, unspecified parts of the regulations.

Many other disputes still need to be resolved between the two parties — including Salvini’s demand that Italy ignore EU deficit and debt rules as he seeks resources to pay for ambitious tax cut plans.

The European Commission is likely to begin disciplinary procedures against Italy on Wednesday over its failure to reduce public debt.

Speaking to reporters on Monday, Conte said Italy would have to respect EU fiscal rules until it managed to change them, effectively telling Salvini that Rome could not afford the spending splurges he has promised voters.

Salvini told supporters on Monday evening that last month’s EU vote had shown that Italians wanted to break with EU rules.

“If I realise after a couple of weeks that we are still saying the same things, with the same delays and the same postponements, then we would have a problem,” Salvini told RTL radio on Tuesday ahead of his call to Di Maio.

Italian coalition leaders keep sniping even after PM ultimatum

Italy’s coalition leaders professed loyalty to the government on Tuesday after Prime Minister Giuseppe Conte threatened to quit if they did not stop feuding, but the two ruling parties kept up their mutual recriminations.

Conte told reporters on Monday he would resign unless the right-wing League and anti-establishment 5-Star Movement did not put aside their many differences and resume work on enacting an agreed policy programme.

Both League leader Matteo Salvini and his 5-Star counterpart Luigi Di Maio said on Tuesday they wanted to continue working together. However, underscoring the deep-seat rancour, a 5-Star minister accused the League of plotting to collapse the year-old government, while Salvini set an ultimatum of his own.

“If I realise after a couple of weeks that we are still saying the same things, with the same delays and the same postponements, then we would have a problem,” Salvini, who serves as deputy prime minister, told RTL radio.

Relations between the two coalition parties deteriorated dramatically in the build-up to last month’s EU parliamentary election, which saw the League become Italy’s most popular party while the 5-Star lost half its support in barely a year.

Since the vote, Salvini has been behaving as the defacto prime minister, promising major tax cuts and demanding changes to European Union budget rules that impose limits on the amount of debt and deficits governments can run up.

In particularly pointed comments, Conte said on Monday Italy would have to respect EU fiscal rules until it managed to change them, effectively telling Salvini that Rome could not afford the sort of spending splurge he has promised voters.

FISCAL BATTLE

The European Commission is likely to begin disciplinary procedures against Italy on Wednesday over the country’s failure to reduce public debt and it was not immediately clear if Salvini was ready to fall into line.

Speaking to supporters on Monday evening, Salvini said the EU vote had shown that Italians wanted to break with EU rules.

Besides the looming fiscal battle, the government faces an array of other internal policy disputes, including a League drive to give greater autonomy to northern regions and a push to rewrite rigid building norms to kick-start the waning economy.

League politicians have said the current code, which is hugely complex in an effort to shut out mafia businesses, should be suspended for two years.

Transport Minister Danilo Toninelli, who is a member of 5-Star, denounced the proposal as “stupid”.

“It makes one think … that this is a pretext to create chaos and bring down the government,” he told Radio 24.

If Conte cannot restore order, President Sergio Mattarella would probably order new elections four years early, which would almost certainly be held in September – the first time a national ballot has been staged in the autumn.