MNI EXCLUSIVE: Italy Reshuffle Nears As PM Conte Hangs On

A revolt by a minor centre-left party over how to spend tens of billions of euros in European Covid recovery money looks likely to force an Italian government reshuffle in the coming days, although finance ministry sources told MNI officials will try to ensure there are no delays in approval of key legislation needed for Brussels to begin to transfer the funds.

Members of the Italia Viva party led by former prime minister Matteo Renzi are threatening to resign at a council of ministers due to be held on Sunday or Monday in protest at Conte's Covid Recovery Plan, which must be presented to the European Union in order to access its EUR750 billion NextGenerationEU emergency funding package.

Renzi wants to force Conte from office but to preserve the governing coalition under a different prime minister, sources at the finance ministry told MNI, adding that their priority was to ensure swift approval for the Recovery Plan by Brussels. Conte is likely to survive, parliamentary sources said, but he looks set to be weakened and will probably be forced to make sweeping changes to his cabinet.

The Five-Star Movement, to which Conte has links but of which he is not a member, will lose ministers and influence even if the reshuffle is small, in a further blow to the populist force which rose out of nowhere to dominate Italian politics in little over a decade but is now haemorrhaging support in both houses of parliament, sources from all three of the coalition's main parties said.

IN PARLIAMENT, "ANYTHING CAN HAPPEN"

If more than a handful of changes are made to ministers, Conte would also have to seek the approval of the legislature, making the outcome of the crisis more unpredictable, they added.

"With a superficial reshuffle Conte wins and this would mean this crisis is resolved, but if he needs to go to parliament anything can happen", a senior member of the centre-left Democratic Party in the lower house Chamber of Deputies told MNI.

Conte has already conceded many of the demands presented by Renzi in December. The prime minister has agreed to double the health component of the Recovery plan to EUR19.7 billion, and parliament and opposition parties will have more of a say in how the money is spent. But Conte has resisted calls by Renzi to apply for an emergency loan from the European Stability Mechanism, and it is still not clear the concessions will be sufficient to guarantee approval for the plan in parliament, although a senior Italia Viva official told MNI "we have noticed a nice change in the music."