Italian PM resigns, denounces Salvini for sinking government

By Crispian Balmer and Gavin Jones

ROME (Reuters) - Italy's prime minister resigned on Tuesday after launching a blistering attack on his own interior minister, Matteo Salvini, accusing him of sinking the ruling coalition and endangering the economy for personal and political gain.

Prime Minister Giuseppe Conte, addressing parliament after it was recalled from its summer recess to decide the future of the 14-month-old government, accused the far-right League party chief Salvini of seeking to cash in on his rising popularity.

In a shock move on Aug. 8, Salvini declared that his alliance with the anti-establishment 5-Star Movement was dead and called for elections, but the gambit could yet prove a big political blunder and open the door to power for his rivals.

Politicians from 5-Star and the centre-left Democratic Party (PD) are openly discussing forming a new coalition which would push the League into opposition and give Italy a more centrist, pro-European government.

“The interior minister has shown that he is following his own interests and those of his party,” Conte told a packed Senate, a stony-faced Salvini sitting by his side. “His decisions pose serious risks for this country.”

He described Salvini's actions as reckless and “liable to tip the country into a spiral of political uncertainty and financial instability”.

After the Senate debate Conte, who belongs to neither of the coalition parties, handed his resignation to President Sergio Mattarella, who said he would begin talks with parliamentary groups on Wednesday to see if a new coalition can be formed.

Failing that, Mattarella would have to dissolve parliament, 3-1/2 years ahead of schedule, to allow for autumn elections.

The consultations with party delegations will begin with minor groups at 1400 GMT on Wednesday. Mattarella will hear all the main parties on Thursday, concluding with 5-Star at 1500 GMT.

The PD's leadership is also scheduled to meet on Wednesday to discuss the prospect of hooking up with 5-Star. The two parties have been bitter political foes for years.

Financial markets rallied on Conte's resignation, seemingly hopeful that snap polls could be avoided.

CHALLENGING EUROPE

Salvini at times shook his head, rolled his eyes or nodded to League senators as the prime minister accused him of being “irresponsible”, “reckless”, “alarming” and “disrespectful”.

Conte said he was worried by Salvini's threat to call people into the country's squares if his drive for elections were thwarted, as well as his demand for “full powers”.

“We do not need men who have 'full powers', but people who have institutional culture and a sense of responsibility,” he said in an hour-long speech in which he also denounced Salvini's habit of brandishing the cross at his political rallies.

Touching on a particularly sensitive subject, he also said Salvini should provide explanations over allegations that the League attempted to obtain illegal funding from Russia through a covert oil transaction.

Salvini rejected Conte's comments, saying other parties were afraid of going to elections and losing their influence.

He said his political goal was to challenge the European Union's fiscal rules, which he has blamed for impoverishing the country. Rome should spend at least 50 billion euros ($55 billion) to stimulate the chronically weak economy, he added.

“I am not afraid,” he said. “I don't want Italy to be a slave to anyone, and I don't want Italy to be given a long chain like a little dog. I don't want any chain at all.”

Italy has not held an election in the autumn since World War Two because the final months of the year are traditionally dedicated to drawing up the budget -- a key moment for a country with one of the world's largest debt mountains.

At the end of the parliamentary debate the League withdrew the no-confidence vote in the government that it had tabled earlier this month, but Conte said the move had come too late.

“I see that the League's leader Matteo Salvini lacks the courage to take responsibility for his actions. If there's a lack of courage, don't worry, I'll take responsibility before the country that is watching us,” said Conte.

Mattarella is likely to push for a swift decision by the 5-Star and PD on whether they can work together. Failing that, he will probably dissolve parliament and call a vote in late October or early November.

“They won't be able to run away from elections for ever,” Salvini told reporters as Conte met the president.