MILAN (Reuters) - Italy's prime minister halted on Saturday the launch of tenders for a high-speed rail link to France, defusing a dispute within the ruling coalition over the project that had threatened to bring down the government.
The multibillion-euro TAV project (Treno Alta Velocita) is backed by Matteo Salvini's League party but strongly opposed by its coalition partner, 5-Star Movement, which argues that Italy's share of the funding would be better spent upgrading existing roads and bridges.
Tensions between the two sides had escalated ahead of a Monday deadline for the company overseeing the project, TELT, to launch tenders to carry out works on it.
Prime Minister Giuseppe Conte said in a post on Facebook he had asked TELT to halt the tenders because his government had committed to "totally re-discussing" the project.
Conte published a response from TELT, which said it would only launch the tenders for the French portion of the rail link on Monday in order to avoid losing European Union funding.
Conte said that Italy would hold discussions with France and the EU in light of a recent cost-benefit analysis commissioned by the Italian government, which found the TAV was a waste of public money.
Deputy Prime Minister Luigi Di Maio, who is leader of the 5-Star Movement, said earlier in a Facebook post that the dispute was "being resolved positively."
"Let's talk about something else and carry on," he wrote.
The TAV is a joint venture between the Italian and French states to link the cities of Turin and Lyon with a 58-km (36-mile) tunnel through the Alps on which work has already begun.
The EU has pledged to fund up to 40 percent of the costs of the TAV, Italy up to 35 percent and France up to 25 percent.
Italy's transport minister, a 5-Star official, puts the total price tag at more than 20 billion euros ($22.6 billion).
His French counterpart, Elisabeth Borne, said on Friday the European Commission had let it be known it was willing to increase its share to 50 percent, leaving France and Italy to finance 25 percent each.
A European Union official had told Reuters the project could lose up to 300 million euros of EU funds if the tenders were not launched by the end of March.
The long-running dispute suddenly escalated late on Thursday and raised the risk of a government collapse, with Di Maio accusing Salvini of acting irresponsibly by insisting the train link should go ahead.
Salvini reiterated on Friday that the League would "never" vote in parliament to block the project, as 5-Star wants.
But on Saturday he sought to quell fears that the government could fall over the rail link.
"Italy needs a government ... There won't be a crisis," he said in an interview with news channel Sky TG24.
ADVERTISEMENT(Reporting by Giuseppe Fonte and Elvira Pollina; Writing by Silvia Aloisi; Editing by Helen Popper)