Talks on forming a new Italian government ran into trouble on Tuesday as the ruling 5-Star Movement and the opposition Democratic Party (PD) traded accusations over key jobs, including that of interior minister. The anti-establishment 5-Star suspended negotiations with the center-left PD until it clearly committed to the return of outgoing Prime Minister Giuseppe Conte as PM. The PD meanwhile accused 5-Star of undermining the formation of a new Cabinet by demanding the interior ministry for its leader, Luigi Di Maio. "The government agreement is at risk of failure due to the personal ambitions of Luigi Di Maio, who wants to be the Minister of the Interior and the Deputy Prime Minister," the PD spokesman said. "On this Luigi Di Maio pays attention to nobody and proceeds through ultimatums," the spokesman said. 5-Star sources later said Di Maio — a deputy prime minister in the outgoing administration who also served as economic development and labor minister — had never demanded the interior ministry. The row echoed the in-fighting that preceeded the collapse of 5-Star's 14-month-old coalition with the right-wing League earlier in August. Financial markets took Tuesday's very public row in their stride, however, seemingly upbeat that snap elections could be avoided. Italian bank stocks outperformed their European peers and Italy's 10-year bond yields were well below Monday's level. Investors have been concerned an election win by Matteo Salvini's League would put Italy on a collision course with the European Union over expansionary government spending. Late on Monday, the prospects for a PD-5-Star coalition had appeared very different. The PD indicated it had dropped a veto on Conte serving another term as prime minister, removing an early obstacle to a deal. However, 5-Star called a halt to the talks scheduled for early on Tuesday, saying nothing had been achieved in four hours of talks the previous day with Di Maio and PD chief Nicola Zingaretti. "We cannot any longer work like this. Either the attitude changes or it's difficult. We will see the PD again when the party has given its OK to the reappointment of Conte," it said in a statement. Conte, who belongs to no party but is close to 5-Star, resigned last week after Salvini declared the governing coalition was broken. The PD and 5-Star are due to report back to President Sergio Mattarella on Wednesday and if no deal is sealed by then, he will name a caretaker government and call early elections. Salvini has been hoping to capitalize on a surge in his anti-immigrant party's popularity by pushing for early elections. However, his League has lost 5-7 percentage points since collapsing the government, though it remains easily the most popular party, followed by the PD and 5-Star. — Reuters
