Struggling to agree on government pact, Italy's League turns on EU

ROME (Reuters) - Italy’s far-right League, struggling to stitch together a coalition deal with the anti-establishment 5-Star Movement, said on Tuesday it was ready to wage war on European Union budget rules and put Italians first.

The two parties held a sixth day of negotiations aimed at creating a government and ending 10 weeks of political stalemate following an inconclusive election on March 4.

They had been widely expected to unveil a deal at a meeting with President Sergio Mattarella on Monday, but in the event had to ask for more time after differences emerged over policies and over who should head any new administration.

With frustration growing, League leaders turned their fire on Europe Union financial restrictions which, if followed to the letter, would make it impossible for the anti-immigrant party to enact its big-spending electoral promises.

“We need to be able to speak with a single voice, to say to the EU, to which we pay many billions of euros every year, that for us Italians come first,” the League’s economics spokesman Claudio Borghi said, echoing U.S. President Donald Trump’s rallying cry “America First”.

“First must come the things that need doing, and only afterwards (we need worry about) absurd rules written many years ago when the world was totally different,” he said.

The League has promised to introduce a flat tax rate of 15 percent, which would tax revenues by some 80 billion euros ($95 billion) per year, while 5-Star has pledged new welfare payments for the poor costed at around 17 billion euros.

They have both vowed to scrap an unpopular pension reform — a move that would punch a 15-billion-euro hole in state coffers.

Once fiercely eurosceptic, the 5-Star has mellowed in recent months, looking to reassure financial investors that it is fiscally responsible, and is hesitating about signing up to a full-frontal confrontation with Europe over the accounts.

“Where there is a bit of disagreement is whether we should be more or less aggressive over the economic numbers and ambitions,” Borghi said.

SEEKING A PREMIER

With tensions high, Valdis Dombrovskis, the vice president of the European Commission, warned that Italy should maintain its commitment to gradually reduce the public deficit and debt.

“It’s very clear that in current times of economic growth Italy needs to put its debt on a downwards trajectory,” he said.

Another commissioner, Dimitris Avramopoulos, was also quoted on Tuesday as weighing in on Italian politics, saying he hoped the new government maintained current immigration policies.

The League has promised a tougher line on migrants arriving from Africa and denounced Avramopoulos’s comments. “We are seeing the latest, unacceptable interference from an unelected official in Europe,” said League leader Matteo Salvini.

5-Star has adopted a softer line on migration and Salvini said on Monday this was another area of discord between the two sides. However, three 5-Star sources said the main stumbling point remained who should head the administration.

Salvini and 5-Star chief Luigi Di Maio have both agreed to drop their own ambitions to be prime minister and are looking for a candidate from outside their parties to head the government and enact their programme.

In a meeting with Mattarella on Monday, 5-Star proposed little-known law professor Giuseppe Conte. The League has not yet given its go-ahead and a source in the president’s office said it appeared his candidacy was provisional.

Mattarella has given them until next week to find an accord. If they fail to do so, fresh elections look inevitable.

“A non-political prime minister poses some problems because they would find themselves with a programme that has been written by other people,” said a 5-Star source, adding that Di Maio had not yet lost hope that he might take charge.