Italy's Salvini says coalition with 5 Star back on track

Italy's Salvini says coalition with 5 Star back on track
FILE PHOTO: Deputy Prime Minister Matteo Salvini of Italy addresses a news conference at Viminale Palace, Rome, July 15 2019. REUTERS/Remo Casilli/File Photo Copyright Remo Casilli(Reuters)
Copyright Remo Casilli(Reuters)
By Reuters
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By Angelo Amante

ROME (Reuters) - Deputy Prime Minister Matteo Salvini said on Wednesday Italy's government was back on track after a slew of building projects were approved, indicating he had dropped a threat to bring down the coalition.

Salvini, of the far-right League, said last week he would ditch his cabinet partner the 5-Star Movement unless it stopped opposing measures close to his party's heart, including myriad infrastructure projects and greater regional autonomy.

"I have always said that if the government does things, the government will go ahead. Between yesterday and today there have been good signs of things being unblocked," said Salvini.

The League leader said the government on Wednesday had agreed to unlock 50 billion euros ($55.75 billion) of frozen funds to spend on an array of programmes, including the building of roads, schools, hospitals and railways.

"It's been a beautiful, productive morning," Salvini said on a Facebook Live, sounding more upbeat than he has in many days.

The easing of tension fed through to the financial markets that often fret about Italy's huge national debt levels, with 10-year government bond yields falling to a 33-month low.

Adding to Salvini's good mood was the fact Prime Minister Giuseppe Conte had announced on Tuesday that work on a rail link with France, known as the TAV, should proceed because it would cost Italy too much to walk away unilaterally from the project.

The TAV has been a long-standing bone of contention between the League and 5-Star, with Salvini's party demanding that the costly Alpine rail line be completed while 5-Star called on it to be scrapped.

"We convinced the prime minister last night that we need fast, safe and less polluting trains ... luckily the 'no' parties in Italy are getting fewer," said Salvini, painting the TAV decision as a clearcut victory for the League.

Salvini's comments make a government collapse look highly unlikely, but some clouds still hover over both the coalition and the League leader.

The party's drive to hand greater autonomy to the regions remains blocked, with Conte struggling to find a formula that will be acceptable both to the League and 5-Star, which is worried that the reform could hurt its southern strongholds.

Salvini himself is still under pressure over allegations that his party sought funds via an illicit oil deal with Russia. He has dismissed the accusations, but has so far dodged demands that he address parliament over the scandal.

"If I am interested in espionage, I will watch a James Bond film. I promise you that...we have not asked, received or been given money from anyone, anywhere in the world," Salvini said.

With his deputy ducking parliament, Conte said he would appear before the house on Wednesday to discuss the affair.

($1 = 0.8969 euros)

(Additional reporting by Giuseppe Fonte; Writing by Crispian Balmer; Editing by Mark Heinrich)

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