The Italian government formation crisis in seven points

  1. What has happened?

The President of the Republic Sergio Mattarella has proposed Carlo Cottarelli as prime minister.

2. Why has he done this?

He has done this because he did not want to propose a government led by Giuseppe Conte, which would have been backed by the Five Star Movement and the Lega.

3. What was wrong with a Conte government?

A Conte government would have included Paola Savona as Minister of the Economy. Savona, an economist and university professor, has in the past expressed support for Italy leaving the euro, and for doing so quickly and (at least initially) covertly.

4. Does that mean that Italian presidents won’t allow Euroskeptic governments?

No: Mattarella had instead suggested that Giancarlo Giorgetti (Lega) take on the role of Minister of the Economy. This would mean that the Lega would politically incur any costs of an exit from the euro (or moves to make that more likely). This offer was refused.

5. Can the President do this?

Yes. Article 92 of the Italian constitution gives the President the power to appoint ministers on the proposal of the Prime Minister. The President can refuse nominees. Past Presidents have refused to appoint different nominees for different reasons. For example: the previous President Giorgio Napolitano blocked the appointment of a state attorney-general as Minister of Justice on the grounds that it was necessary to maintain a separation between the world of politics and the world of the law. 
6. Was it wise for the President to do this?

Probably not. Mattarella’s argument — that parties that are euroskeptic must endorse this openly and own the process — is a subtle one, which may be hard to communicate. Although Italian Presidents typically enjoy huge reservoirs of goodwill, Mattarella is now consuming some of that goodwill. Whether or not this decision benefits the M5S and the Lega — and openly advocating a return to the lira may be much more costly than griping about the euro — it may end up moving Italian exit from the euro from the margins of political discourse.

7. What will happen now?

Cottarelli will almost certainly fail to secure the confidence of the parliament, but will instead lead a caretaker government which will last until fresh elections in September. That election is likely also to result in a fragmented parliament unless the M5S and the Lega ally and retain a large proportion of their current support.