Italy’s new PM Gentiloni races to form new cabinet

Italy's premier-designate Paolo Gentiloni raced to put together a cabinet team on Monday as the market welcomed the apparent rapid resolution of the country's political and banking crises.

Published: 12 December 2016 14:29 CET

Italy's new PM Gentiloni races to form new cabinet

Newly-named PM Paolo Gentiloni gives his first press conference. Photo: Alberto Pizzoli/AFP

Gentiloni, 62, was asked by President Sergio Mattarella on Sunday to form a new centre-left government that will guide Italy to elections due by February 2018, following the resignation of outgoing Prime Minister Matteo Renzi.

Opposition parties slammed the softly-spoken former foreign minister as little more than a Renzi puppet, but Milan's FTSE Mib saluted the move, up 1.04 percent at 2:00 pm (1300 GMT).

It was also buoyed by relief over the news the Italian government would intervene to recapitalize Italy's Monte dei Paschi di Siena bank (BMPS), should it fail to raise the money from private investors needed to stay afloat.

Silver-haired Gentiloni, a one-time student radical from an aristocratic family, is expected to keep the cabinet largely untouched and present his final list to the president by the close of play Monday.

He will then seek parliamentary approval of his new government on Tuesday or Wednesday.

The biggest cabinet seat to fill is the one left vacant by Gentiloni himself, that of foreign minister.

Reshuffle

Political watchers say it could go to Piero Fassino, a member of Renzi's centre-left Democratic Party (PD) who has previously held the justice and foreign commerce portfolios.

Interior Minister Angelino Alfano, who was Renzi's deputy and heads the New Centre-Right (NCD) party, is also tipped for the post.

Should it go to Alfano, the interior portfolio could be handed to Domenico Minniti, the state secretary with responsibility for the security services under Renzi.

Analysts say Gentiloni could also keep the foreign minister job for himself, at least in the short term. Pier Carlo Padoan is expected to stay on as finance minister to reassure Europe that the eurozone's third-largest economy is on solid ground.

Among the most pressing issues facing the new government is the fate of the troubled BMPS.

The institution, the third largest in Italy, had requested extra time from Europe to plug a gaping hole in its finances, but reports on Friday that the European Central Bank had refused spooked the markets.

'Super speed'

But just hours after Gentiloni was named as prime minister, the bank said it could avoid appealing for a government bailout, with BMPS shares up 6.46 percent in early afternoon trading on Monday.

Oanda analyst Craig Erlam said investors were “more optimistic” the bank could raise the 5 billion euros ($5.29 billion) needed to avoid a handout and were relieved political uncertainty had been removed in the short term at least.

Gentiloni is now rushing to resolve the political crisis sparked by Renzi's crushing referendum defeat and downfall in time for Italy to attend the European Council meeting in Brussels on Thursday, where the pressing issue of migration is on the table.

Italy is on the frontlines of the migrant crisis, with a record 175,000 people landing on its shores this year alone.

“The Gentiloni-Padoan government is coming together at a super speed to prevent the implosion of the Siena bank (BMPS) and to make sure Italy does not turn up at the European Council with an incomplete government,” La Stampa daily said.

Renzi may be down and out for now, but analysts said he had tapped Gentiloni to replace him because he trusts him to keep his seat warm for the next general elections, which could be brought forward to early next year.

By Ella Ide

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The strike comes after Albanian Prime Minister Edi Rama — who is close to Meloni — called a top RAI editor to complain about a television report into Italy’s controversial migration deal with his country.

The Usigrai trade union called the strike from May 6 to May 7 saying talks with management had failed to address their concerns.

It cited numerous issues, including staff shortages and contract issues, but in first place was “the suffocating control over journalistic work, with the attempt to reduce RAI to a megaphone for the government”.

It had already used that phrase to object to what critics say is the increasing influence over RAI by figures close to Prime Minister Meloni, who leads Italy’s most right-wing government since World War II.

However, another union of RAI journalists, Unirai, said they would not join what they called a “political” strike, defending the return to “pluralism” at the broadcaster.

Funded in part by a licence fee and with top managers long chosen by politicians, RAI’s independence has always been an issue of debate.

But the arrival in power of Meloni — leader of the far-right Brothers of Italy party, who formed a coalition with Matteo Salvini’s far-right League party and the late Silvio Berlusconi’s right-wing Forza Italia — redoubled concerns.

Tensions erupted at the weekend amid accusations RAI censored a speech by a leading writer criticising Meloni ahead of Liberation Day on April 25, when Italians mark the defeat of Fascism and the Nazis at the end of World War II.

Both RAI’s management and Meloni have denied censorship, and the premier posted the text of the monologue on her social media.

In another twist, Albania’s premier confirmed Thursday he called senior RAI editor Paolo Corsini about an TV report on Sunday into Italy’s plans to build two migration processing centres on Albanian territory.

Rama told La Stampa newspaper the report was “biased” and contained “lies” – adding that he had not raised the issue with Meloni.

The Report programme claimed the costs of migrant centres, which are under construction, were already “out of control” and raised questions about criminals benefiting from the project.