Italy's rival populist leaders to report on coalition talks

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But on Wednesday morning they issued a joint statement that harked back to the days of the 1980s and early 1990s when Italy's currency was the lira and before the EU's Maastricht treaty began to impose stringent fiscal standards on aspiring members of the euro. Lega in particular wishes to radically cut taxes, including VAT and excise duties, but European Union commissioner Valdis Dombrovskis spoke out Tuesday morning to tell Italy they must conform with European Union demands.

Italy's president has summoned rival populist leaders to see if they've nailed down a coalition deal, more than 10 weeks after elections yielded a political impasse.

Speaking to reporters in parliament, Salvini said the policy agenda the two parties have been working on for a week was "almost finished", and he and 5-Star leader Luigi Di Maio would meet with President Sergio Mattarella "even before Monday".

However, three sources within 5-Star, which was founded in 2009 and has no experience of national government, said the main stumbling point remained who should head the administration.

The leaked draft also proposed asking the European Central Bank to "freeze" or "cancel" €250bn in Italian debt that it holds after the end of its quantitative easing bond-buying programme - another highly contentious proposal that could unnerve markets and policymakers.

"It is absolutely clear that they want to respect their electoral promises", he told EUobserver.

Both parties in the potential coalition arrangement have agreed to crack down on immigration to Italy, but exactly how and to what extent is believed to be one of the areas still up for agreement. 5-Star has moderated its position considerably in the a year ago, rowing back on a previous plan to hold a referendum on Italy's membership of the currency bloc.

The League, which is in coalition talks with the anti-establishment Five Star Movement, has called for a harder line on migrants and wants to take Italy, the third largest economy in the eurozone, out of the single currency. However the League still wants to leave the euro zone as soon as is politically feasible.

The 5-Star Movement, which bills itself as an alternative to traditional politics, makes its positions and candidates subject to review by supporters in online votes.

Turning to other issues that have snarled Rome's relations with Europe, the draft calls for asylum seekers who arrive in Italy to be relocated automatically across the European Union.

They also demand an immediate end to sanctions on Russian Federation in order for Moscow to become a "strategic partner" in regional hotspots, such as Syria and Libya.



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