Italy back in chaos, as Draghi quits over 5-Star snub

"I want to announce to you that tonight I will tender my resignation in the hands of the president of the Republic," the prime minister later told members of his cabinet, according to a government statement.

The outcome of the Senate vote means that the "national unity coalition that has supported this government since its creation no longer exists," Draghi continued, lamenting that "the pact of trust" between allies had been broken.

The crisis raises the spectre of snap elections in late September or early October — about six months before they are due — unless the prime minister can be made to reverse his decision.

President Sergio Mattarella came out in support of this solution, as his office said he "did not accept" Draghi's resignation and told him to go back to parliament for "an assessment of the situation."

The leader of the M5S, ex-premier Giuseppe Conte, has hinted he would be ready to make peace, but it is unclear at what price, and whether Draghi and others would be prepared to pay it. 

The leader of the centre-left Democratic Party, Enrico Letta, said the next five days — Draghi is expected to address parliament on Wednesday — would decide whether the crisis can be patched up, saving Italy from "the dramatic tailspin in which it is going in these hours." 

Earlier this week, the prime minister signalled he had no appetite for clinging to power at all costs, leaving him exposed to more insurgencies and hostile posturing from the M5S or the far-right League, another recalcitrant coalition member.

"If there is a feeling that staying in this government causes extraordinary pain, is a struggle, causes no pleasure, that there is no satisfaction from what the government does, then we should be clear, no?" he said Tuesday.

"In other words, if the government can work it continues, if it cannot work, it does not continue," Draghi added.

The M5S broke ranks over a € 26bn aid package that includes plans to build a waste incinerator to address Rome's garbage crisis. The party opposes the incinerator out of toxic emissions concerns; it also accuses the government of not doing enough against poverty.

The act of rebellion gives the formerly anti-establishment party the chance to rekindle its radical credentials as it gears for upcoming elections, after years in government marred by internal feuds, policy U-turns, mass defections and sliding poll numbers.

The M5S came out on top in the 2018 general elections, winning around 33 percent of the vote, but now polls at around 11 percent and has lost nearly half of its elected MPs, including its former leader, foreign minister Luigi Di Maio, who formed a new party last month.

Italy is used to political crises, having had 67 different governments since it became a republic in 1946, with prime ministers lasting in office an average of little more than a year. Draghi lasted a bit longer, having been sworn in 17 months ago.

Known in his previous role of president of the European Central Bank as the man who saved the euro, the 74-year old was called out of retirement to lead a national unity government tasked with speeding up Covid vaccinations and implementing EU-required reforms.

His resignation comes as Italy remains under pressure from Brussels to comply with reform targets tied to the around  €200bn in loans and grants from the EU post-Covid recovery plan.

The country also faces a worsening economic outlook as a result of the war in Ukraine, with an energy crunch, rising inflation, slowing growth and renewed market concerns about its high level of public debt, standing at more than 150 percent of GDP.

The European Commission is following political developments in Italy with "worried bewilderment," EU economy Commissioner Paolo Gentiloni a former Italian premier, said in Brussels.

"In these troubled waters, [with] war, high inflation, energy risks, geopolitical tensions, stability is a value in itself, and I think we need cohesion right now, not to cause instability," Gentiloni said.