Why is Italy facing a new political crisis?

Why is Italy facing a new political crisis?

Italy's PM-designate Giuseppe Conte has failed to form a government with reports that his choice of economy minister was rejected by the president.

In his first remarks Monday, Cottarelli said he would guide a politically "neutral" government that would lead Italy to new elections.

European stocks were slightly higher Monday morning, as investors monitored signs of thawing tensions between the US and North Korea and reacted to renewed political turmoil in Italy.

Italian President Sergio Mattarella said he refused to approve populist leaders' choice of an economy minister who has expressed anti-euro views because the appointment would have "alarmed markets and investors, Italians and foreigners".

League leader Matteo Salvini and 5-Star chief Luigi Di Maio responded angrily, saying the President was acting beyond the powers the constitution assigns to him.

On Monday, President Sergio Mattarella tapped Cottarelli to try to form a government that can bring Italy to a new election, which Cottarelli said could come as early as this autumn.

Cottarelli, 64, was director of the IMF's fiscal affairs department from 2008 to 2013 and became known as "Mr Scissors" for making cuts to public spending in Italy.

Mr Mattarella "didn't give the centre-right the chance to form a government because we didn't have the votes, and now Mr Cottarelli arrives without any votes?" "The main risk is that the stand-off will further embolden the 5-Star, and especially the League".

"[Mattarella] said no, he said there would not be a government".

President Sergio Mattarella turned to the former International Monetary Fund official to run a technocratic government until an early election can be held.

"We need to keep cool".

"It's an institutional clash without precedent", he said on a live-streamed Facebook video.

Salvini, who was Savona's biggest advocate and a fellow eurosceptic, declared that Italy was not a "colony", and that "we won't have Germany tell us what to do".

"I have agreed with and accepted all the proposals for the Ministers, except that of the finance minister", he said Sunday.

The leader of Italy's far-right League Matteo Salvini on Monday dismissed talk about a possible impeachment of the country's president and said he wanted to change the electoral law with the 5-Star Movement. Mattarella's predecessor Giorgio Napolitano supported the ousting of Silvio Berlusconi as prime minister in 2011. Italy's constitutional court would first have to accept that the issue could be taken up by parliament. He added that the League and Five Star had refused to put forward any other name for the role.

The coalition had wanted to place 81-year-old economist Paolo Savona in charge of Italy's economy, although the former industry minister has been a key figure in questioning Italy's participation in the eurozone and the budgetary restrictions the European Union requires of its members.

A technical government will still be subject to votes of confidence in both houses of parliament, and the 5-Stars and League made clear Cottarelli wouldn't have their support.

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