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Politicians from Five Star and the center-left, pro-European Democratic Party (PD) are openly discussing forming a new coalition, which could push the League into opposition.
Italy's Prime Minister Giuseppe Conte resigned Tuesday after accusing his own Interior Minister, Matteo Salvini, of sinking the ruling right-wing coalition and endangering the economy for personal and political gain.
The premier, 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.
"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."
On Aug. 8, Salvini declared that his alliance with the anti-establishment Five Star Movement was over and called for snap elections.
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, three and half years ahead of schedule, to allow for autumn elections.
The consultations with party delegations will begin with minor groups and Mattarella will hear all the main parties on Thursday, concluding with Five Star.
The center-left, pro-European Democratic Party (PD) leadership is also scheduled to meet on Wednesday to discuss the prospect of working side by side with Five Star. The two parties have been political foes for years.
Politicians from Five Star and the PD are openly discussing forming a new coalition, which could push the League into opposition.
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.
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 EU's fiscal rules, which he has blamed for impoverishing the country. Rome should spend at least US$55 billion to stimulate the chronically weak economy, he added.
At the end of the parliamentary debate the far-right 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.
He added that his party was not afraid of elections in autumn or a possible alliance between the Five Star Movement and Democratic Party, who could unite to form a government to have a parliamentary majority.
Mattarella is likely to push for a swift decision by the Five 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.