This post was originally published on this site

Prime Minister Giuseppe Conte‘s approval ratings rose over his handling of his country’s lockdown because of Covid-19.

Photo: filippo attili/chigi palace pres/Shutterstock

ROME—In the depths of the pandemic, one sign of normality is returning to Italy: political instability.

The government of Prime Minister Giuseppe Conte is struggling to avoid collapse after a small coalition member threatened to withdraw vital parliamentary support. The Italia Viva party, led by former Italian Premier Matteo Renzi, has long been skeptical of Mr. Conte’s leadership and is raising pressure on a range of issues, including how to reconstruct Italy’s battered economy after the pandemic.

If Mr. Renzi pulls out of the coalition, forcing Mr. Conte to resign, the possible outcomes range from a new government with the same center-left leaders to snap elections that a rival center-right alliance would likely win.

Many observers predict Mr. Conte will continue, albeit with Mr. Renzi’s small party having more clout. Whatever the outcome, the tussle shows that the surprising stability of Italian politics during the pandemic is coming to an end.

Mr. Conte, a little-known law professor chosen to lead two rickety coalition governments in 2018 and 2019, has become an unexpectedly strong premier since last year, when Italy became the first Western country severely struck by Covid-19. His approval ratings rose as he worked with allies and opposition parties to orchestrate the first lockdown of a whole country, using rigorous measures that were soon adopted around the world.

But Italy’s success at containing the virus by last summer has given way to a resurgence of contagion since the fall, widespread weariness at lengthy restrictions on daily life and mounting fears for the national economy.

The political class in Rome is placing its hopes on the massive economic-recovery funding that the European Union is funneling to hard-hit member countries. Italy is expected to be the biggest recipient of EU support, with over €200 billion in grants and cheap loans from the EU effort.

The scale of the money—and the sense it could be a unique opportunity to revitalize an Italian economy that has struggled to grow for the past two decades—is fueling instability in the government. Mr. Renzi has attacked Mr. Conte’s economic plans as not up to the task.

On Friday, the governing coalition—which mainly comprises the center-left Democratic Party and the ideologically eclectic, antiestablishment 5 Star Movement—was locked in talks to find a way to avoid collapse.

Italy hasn’t had the money to consider such ambitious economic-revival plans for many years. The country has one of the world’s highest national debt burdens, mostly inherited from the spendthrift 1980s, forcing Rome to run tight budgets for the past quarter-century.

Former Premier Matteo Renzi leads the Italia Viva party.

Photo: Roberto Monaldo/Zuma Press

Low public investment has contributed to Italy’s sluggish growth rates, which have rarely exceeded 1% a year in recent times, and left the country trailing others in areas such as higher education and infrastructure.

Mr. Renzi, as premier in 2014-16, briefly carried popular hopes of economic renewal, but his party would now struggle to win seats in Parliament if snap elections were held. In recent weeks he has attacked Mr. Conte’s bid to control how the EU funds are spent. Mr. Conte wanted to set up a tightly controlled committee comprising a few ministers and private-sector managers to oversee the funds, involving no one from Mr. Renzi’s party.

Mr. Conte, scrambling to preserve his parliamentary majority, has made a number of concessions to Mr. Renzi’s demands, including scrapping the controversial committee and pledging more money for the health-care sector. So far, the former premier isn’t satisfied, and the government’s fate continues to hang in the balance.

Write to Giovanni Legorano at giovanni.legorano@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8