Berlusconi Clashes With League Over Five Star Offer of Pact

(Bloomberg) -- Matteo Salvini, head of a center-right alliance, has clashed with his partner Silvio Berlusconi over an offer of a populist-led government as Italy's president held one more round of talks with party leaders to find out whether a working majority is possible.

Salvini and Berlusconi met Monday morning, in their second encounter after a tense gathering Sunday night, at which Salvini, who also leads the anti-immigrant League, pushed for acceptance of a proposal from Luigi Di Maio, head of the anti-establishment Five Star Movement.

Di Maio said at the weekend that he would be willing to take a step back and let someone else be prime minister of an administration with the League. But he insisted that Berlusconi, whom Five Star considers a symbol of political corruption, should not play a role. Berlusconi is banned from holding public office until next year because of a 2013 tax-fraud conviction.

President Sergio Mattarella will meet party leaders throughout Monday. Sixty-four days after March 4 general elections led to a hung parliament, with the center-right ahead of Five Star, the head of state is still seeking a working majority for a new government -- the second-longest such period since 1992.

After meeting Mattarella, Di Maio told reporters early elections are the only option possible if his offer of a government with the League doesn't succeed. “The government must be a political one, we must agree on a premier but also on ministers who have a political connotation,” Di Maio said. “I don't envisage a government of technocrats.”

If his talks fail, Mattarella is considering picking a non-partisan figure to lead an interim government with the task of pushing the 2019 budget through parliament by the end of the year, and changing the electoral system ahead of new elections possibly early next year. If that option is rejected by parties, elections could be held as early as September.

A populist-led tie-up could unsettle investors concerned about spending policies threatening Italy's public finances and plans for more European integration. Both Salvini and Di Maio have promised spending hikes or tax cuts with only vague explanations of how they'll finance them and they've also vowed to roll back previous labor-market and pension reforms.

To contact the reporter on this story: John Follain in Rome at jfollain2@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Kevin Costelloe, Ben Sills

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