Coalition Collapses, Italian Prime Minister Mario Draghi Resigns

JAKARTA - Italian Prime Minister Mario Draghi submitted his letter of resignation to President Sergio Mattarella on Thursday, after his unity government collapsed, plunging the country into political turmoil and hitting financial markets.

President Mattarella's office said in a statement the head of state had "noted" the resignation and asked Draghi to remain in an interim capacity.

The statement did not say what President Mattarella would do next. Political sources said earlier this week, Draghi is likely to dissolve parliament and hold early elections in October.

Citing Reuters, July 21, President Mattarella plans to meet with the speakers of both houses of parliament on Thursday afternoon.

Italy's coalition collapsed on Wednesday when three of Draghi's main partners rejected a no-confidence vote he called to try to end the split and to renew their fractured alliance.

The political crisis has ended months of stability in Italy, where the respected former central bank governor Draghi has helped shape Europe's tough response to Russia's invasion of Ukraine, boosting the country's standing in financial markets.

"This is a major blow to Italy's ability to deliver policies and reforms in the near future," said Lorenzo Codogno, head of the LC Macro Advisory and a former senior official with the Italian Ministry of Finance.

"There will be delays and disruptions with early elections, and most likely no budget by the end of the year."

Previously, Draghi had submitted his resignation last week after one of his partners, the populist 5 Star Movement, failed to support him in a vote of confidence on measures to tackle the high cost of living.

President Mattarella then rejected the resignation and told Draghi to go to parliament, seeing if he can maintain the broad coalition until the planned end of the legislature in early 2023.