Italy Coalition Girds for Succession Battle as Di Maio Quits

John Follain
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Italy Coalition Girds for Succession Battle as Di Maio Quits

(Bloomberg) -- Luigi Di Maio’s resignation as leader of the biggest party in Italy’s fractious coalition has set the stage for a bruising succession battle that threatens to destabilize Prime Minister Giuseppe Conte’s government.

The decision of the head of the anti-establishment Five Star Movement ratchets up the pressure on an already fragile administration. Di Maio, 33, told a Five Star event in Rome Wednesday that he’ll give up the leadership position because he’s “completed my task” and the movement needed an overhaul.

Di Maio said he was committed to the government serving its full term and lashed out at his critics within the party. “The worst enemies are the ones on the inside, with whom you had fought for shared values.”

His move comes on the eve of weekend elections in Emilia Romagna, a leftist stronghold where polls show Five Star is set for a poor performance. Di Maio earlier Wednesday told party colleagues of his decision, saying he will stay on as foreign minister.

A win in the northern region by the League party’s Matteo Salvini, who’s had his sights set on the premiership ever since breaking up Italy’s last government over the summer, would reverberate all the way down to Rome. Emilia Romagna has historically been run by the center-left Democratic Party, the second-biggest force in Conte’s coalition.

Italy’s 10-year debt erased losses on Di Maio’s resignation, after yields had earlier climbed as much as eight basis points. Investors cited the possibility of a weaker government whose key members now have more incentive to cling to power and avoid a snap election they’d likely lose. Polls show that the center-right bloc led by the League would triumph in a national vote.

Di Maio pledged in his speech that Five Star would continue to take on the political and business establishment, pointing out that shares in the Benetton family’s infrastructure company Atlantia had risen on reports of his resignation.

“That shows the markets haven’t understood anything,” said Di Maio, who wants to strip Atlantia’s Autostrade per l’Italia of its toll road concessions after a deadly bridge disaster.

Even before Di Maio announced his decision, Five Star officials were guessing at possible contenders to replace him -- a battle that could further weaken the coalition. Vito Crimi, deputy Interior minister, will temporarily run the movement until a party congress in March, Di Maio said.

Still, the government will forge on, said a Five Star deputy-minister who asked not to be named discussing confidential deliberations. The party is united in support for the administration, the official said.

But Five Star’s ally the Democratic Party, or PD, is concerned the tussle could bring the government down and prompt early elections. Choosing Alessandro Di Battista, a Di Maio rival who’s long opposed the alliance with the PD and is seen as closer to the League, could sink the coalition, one PD official said.

Other possible candidates to replace Di Maio cover the spectrum of the party’s various factions. They include Stefano Patuanelli, the economic development minister, his deputy Stefano Buffagni, Di Maio critic Roberta Lombardi, Turin mayor Chiara Appendino, and even embattled Rome mayor Virginia Raggi.

One Democrat under-secretary noted that Di Maio staying in the cabinet could help anchor the party in the coalition, adding that Five Star will need time to reorganize and its partners will have to be patient.

Di Maio has faced mounting internal dissent as his party plunged in opinion polls and lawmakers abandoned it. More than 20 lawmakers have left or been expelled since Di Maio opted to back a second coalition led by Conte last September. The two latest defections came Tuesday.

(Adds Di Maio speech comments from second paragraph)

--With assistance from Marco Bertacche, Alessandro Speciale, Karl Maier, Tommaso Ebhardt, Flavia Rotondi and Alberto Brambilla.

To contact the reporter on this story: John Follain in Rome at jfollain2@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Jerrold Colten, Dan Liefgreen

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