Italy Premier Battles On After Surviving Crucial Senate Vote

(Bloomberg) -- Italian Prime Minister Giuseppe Conte will work to broaden support for his depleted coalition after falling short of an outright majority in a crucial Senate vote.

The premier secured the support of 156 senators on Tuesday, less than an outright majority of 161 votes, while 140 rejected him.

Conte campaigned hard to persuade centrists and unaffiliated lawmakers to come over to his coalition but failed to fully plug the gap left by the defection of a small party led by ex-Premier Matteo Renzi

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“Now the goal is to make this majority even more solid,” Conte said on Twitter.

Though the government remains fragile, the result in parliament should provide a boost for officials across the European Union who are trying to coordinate efforts to fight the coronavirus. It also provides vindication to investors who’ve wagered that Italian politicians wouldn’t pitch the country into an election campaign with the pandemic raging around them.

With the European Central Bank’s bond-buying programs offering support to governments across the euro area, Italy’s 10-year yields have traded in a narrow range throughout the political turmoil.

Italian bonds on Wednesday rallied to send the 10-year yield premium over Germany, a key gauge of risk in the region, to 109 basis points, the lowest in over a week.

Conte will still need an outright majority if he’s to govern in the longer term because that’s the threshold for passing key legislation including budget laws. His position is all the more precarious given that he owes his Senate win to the fact that most of Renzi’s senators abstained, lowering the quorum.

Conte could meet President Sergio Mattarella as soon as Wednesday to discuss options but would not to resign, Corriere della Sera reported. According to the newspaper, Conte could have about two weeks to build a new majority in the Senate.

“Conte lives to fight another day,” Eurasia Group analyst Federico Santi wrote in a note. “He is under no immediate pressure to resign and has showed no indication of wanting to do so, despite his now more precarious parliamentary majority. A government reshuffle might be in order.”

Wednesday Test

The premier, who won an outright majority in a similar confidence measure in the lower house on Monday, will look to add further backing over the coming days, and a group of senators has indicated they’ll declare their support for him as soon as Wednesday, according to people familiar with those talks.

Read More: Conte’s Chameleon Act Gives Him Staying Power in Italian Crisis

The result also helps to minimize the prospect of an early election which would have risked handing power to the center-right opposition led by the anti-immigrant League party. Many lawmakers have also sought to avoid a new vote out of fear they’d lose out with the next parliament scheduled to have fewer lawmakers as part of a reform measure.

For Conte, an obscure law professor until he was elevated to the premiership in 2018, Tuesday’s vote marks the second time he’s managed to survive the defection of a coalition partner. When Matteo Salvini of the anti-migrant League ditched his coalition in 2019, Conte replaced him with the center-left Democratic Party.

“We ask all political and parliamentary forces which have at heart the destiny of Italy to help us to start again as quickly as possible,” Conte said in the Senate on Tuesday.

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