Published: Thu, May 17, 2018
Global | By Marsha Munoz

5-Star, League want European Central Bank to forgive €250 billion of Italy debt

5-Star, League want European Central Bank to forgive €250 billion of Italy debt

"From Europe we have the umpteenth unacceptable interference by unelected officials", League leader Matteo Salvini said on Tuesday.

5-Star's parliamentary party leader Danilo Toninelli told state television Rai: "The only way to get a serious government is to return to the polls".

The leaked documents, as well as Salvini's own public statements, make clear that the emerging Italian government is on course for a major standoff with Brussels if the incoming government pushes hard for a to renegotiation of Italy's contribution to the European Union budget as well as the fiscal compact. Italy is the third biggest economy in the group and the largest in southern Europe.

The 5-Star Movement, founded less than a decade ago by an Italian comedian as an experiment in direct democracy in defiance of Italy's traditional parties, says any coalition deal must pass muster with its supporters.

Italy, along with Greece, has borne the brunt of the migration crisis, while other European Union countries such. Now they say they will try and reform the European Union from within.

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The "Contract for the Government of Change" being drafted by the League and Five Star was described as a "bomb" to the political order by Di Maio on Tuesday. Di Maio and Salvini are expected to report back to him with their plans.

Di Maio backed his potential coalition partner, saying the nascent government was "receiving constant attacks, even today by some eurocrats who weren't elected by anyone".

Besides the differences on migrant policy, Salvini also cited the League's promise to reform Italy's slow-moving justice system.

Despite Borghi's comments, Italy's five-year credit default swaps were up 5 basis points to their highest levels since the end of March.

For some, the ECB's dominant position in euro sovereign debt markets and its stated objective of reducing fragmentation of borrowing costs across the zone beyond that acts as a backstop as long as overall euro breakup risks remain low.

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"I don't see any signs that member states would like to change the rules at least any time soon or give exemptions to any member state", said Commission Vice-President Jyrki Katainen on Tuesday.

The 40-page document contains more than 20 sections, of which a handful - "six points, barely six lines", according to Casalino - still have a question mark over them.

The 5-Star Movement has a much greater appeal in the south, where the youth unemployment rate runs higher than 50 percent in many areas.

Forging a coalition would put the 5-Stars in Italy's national government for the first time. Di Maio has pledged to guarantee a minimum income to the unemployed.

With Italians increasingly restive over the failure to form a new government in Rome, the parties angling for power do not have the luxury of time.

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Back in the currency markets, sterling rallied against both the dollar and the euro after a United Kingdom newspaper reported that Prime Minister Theresa May would tell Brussels that Britain was prepared to stay in the European Union's customs union after a transitional arrangement beyond 2021.

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