Italian 5-star Movement leader DiMaio says government is nearly complete

As Italy's far-right Lega and anti-establishment Five Star parties look to form their country's next government, HuffPost Italia has obtained leaked documents that show the two parties are seeking better ties with Russian Federation and plan to crack down on migration.

"It's a good program, but there are still one or two areas of difference for the leaders to decide on", the League's economics chief Claudio Borghi told Reuters.

The League's senior economic adviser said the parties were simply seeking an "accounting change" so that debt issued by eurozone countries and purchased by the European Central Bank should not be counted in debt-to-GDP ratios.

The joint document will demand the ECB forgives Italy of €250 billion Italian benchmark BTP bonds bought under the bank's so-called "quantitative easing" programme to help reduce Italy's public debt.

Yields on benchmark USA bonds rose on Thursday to their highest level in about seven years, pushing the US dollar to a four-month peak against the yen, while oil prices eclipsed $80 a barrel for the first time since November 2014.

Italy's 10-year bond yield rose 0.06 percentage points in morning trading as investors retreated from the country's debt - yet they remained below pre-election levels, when a Five Star-League coalition was an unlikely scenario.

The League has promised to introduce a flat tax rate of 15%, which would tax revenues by some 80 billion euros (RM376 billion) per year, while 5-Star has pledged new welfare payments for the poor costed at around 17 billion euros (RM80 billion).

A draft of the accord reviewed by Reuters earlier on Thursday spelt out a plan to cut taxes, increase welfare payments for the poor and scrap an unpopular pension reform which seems incompatible with European Union rules on fiscal discipline. It would make "a mockery" of the eurozone's fiscal rules, whereby the government must keep a tight lid on its budget deficit to start tackling its unsustainable debt pile of 130% of GDP.


At present, EU treaties don't provide a procedure for a member state to leave the euro, without leaving the Union as well. The two eurosceptic parties intend to water down recent labour-market reforms and have raised the prospect of a "parallel currency", an eventual replacement for the euro.

Both parties have a history of Euroscepticism.

Berlusconi has refused to govern with the 5-Stars, who he regards as "more unsafe than communists".

The comments are taking a page out of U.S. President Donald Trump's book and rallying cry "America First".

The two populist parties have been holding talks aimed at forming a coalition government and ending 10 weeks of stalemate following an inconclusive election on March 4.

"They are preparing excuses if they can not maintain all their promises, so they want to unleash a battle against the European Union", said Andrea Romano, a lawmaker from the centre-left Democratic party. The policy programme will probably be published on Thursday, 5-Star said.

A government led by Italy's populist 5Star Movement and far-right League would seek to renegotiate European treaties and call for a "radical reform" of the EU's stability and growth pact, according to a leaked copy of the parties' draft coalition agreement.

Mattarella has repeatedly stressed the importance of maintaining a strong, pro-European stance.


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