Italian President Introduces Economist as Interim Prime Minister

Sergio Mattarella, the President of Italy, appointed a former International Monetary Fund official as interim Prime Minister on Monday, June 7, setting the country on a path towards new parliamentary elections. The two main tasks of the interim Prime Minister are to plan for early elections and to approve a new national budget. The appointment of Carlo Cottarelli as interim Prime Minister, tasked with preparing for an early election likely centered on Italy's role in the European Union and the Eurozone, has caused turmoil in financial markets. Italy, the third-largest economy in the Eurozone, failed to form a new government after inconclusive elections in March, and on Sunday, two parties in the country abandoned their efforts to form a coalition government due to the President's opposition. Sergio Mattarella vetoed the European Union opposition parties' candidate for the Ministry of Economy due to their anti-Euro stance, leading the 'Five Star Movement' and the far-right 'League' to accuse the President of ignoring the people's votes and abandon government formation efforts. After his appointment as interim Prime Minister, Carlo Cottarelli stated in a press conference that early elections would be held in the fall or at the beginning of the next calendar year. He also attempted to reassure investors about the Italian economy. Mr. Cottarelli, who played a significant role in previous governments in reducing public spending, said: 'As an economist, I can say that financial market tensions have increased in recent days.' 'Nevertheless, the Italian economy is still growing, and public and government accounts are under control. I fully guarantee that my government will manage public accounts and expenditures well.' The prospect of new elections, which may cast doubt on Italy's membership in the Eurozone, has raised serious concerns among investors. The value of the Euro has fallen to its lowest level in six months, and the yield on Italy's foreign debt has increased. Politicians and parties in Italy have already begun their election campaigns. A representative of the Five Star Movement said they are considering a coalition with the League in the elections. The Five Star Movement participated independently, while the League was part of a coalition of right-wing parties, including Silvio Berlusconi's party, in the March elections. Matteo Salvini, the leader of the League, stated after Carlo Cottarelli's appointment as interim Prime Minister: 'This is not democracy. This appointment does not reflect the people's votes.' He described this action as the ruling system flailing before its demise, aiming to keep Italy in bondage and fearing the reaction of financial markets. Carlo Cottarelli must quickly form a new cabinet that is supported by Parliament, but this seems very unlikely. If Parliament does not support the interim government, the President will use his powers to appoint a new government to lead the country until the next elections. Meanwhile, Mr. Cottarelli is unlikely to be able to pass the 2019 budget in Parliament. In that case, early elections may be held in September.