Italian president begins political talks after PM resignation

ROME - Italian President Sergio Mattarella began talks with political parties on Wednesday, a day after Prime Minister Giuseppe Conte's populist government collapsed.

The prime minister resigned late on Tuesday, and was asked by Mattarella to remain in office as caretaker of current affairs.

The fresh crisis in the eurozone's third-largest economy was ignited by tensions within the coalition supporting Conte's cabinet, made of far-right, anti-immigrant League party and anti-establishment Five Star Movement (M5S).

President Mattarella would play a key role in this phase, verifying with every political force holding seats in parliament whether an alternative majority could be shaped to form a new government.

Given the sensitive time of the crisis -- which may bring the country to unusual new polls in autumn, when some crucial deadlines loom -- the head of state might also suggest forming a technocrat government, but only if parliamentary forces agreed to support it.

Among the urgent domestic affairs were the need to outline the country's next budget, and have it passed by the Italian parliament, and preliminary by the European Union (EU), by the end of the year.

Another key budget-related priority was to avoid a possible value-added tax (VAT) hike.

For most purchases in fact, Italy's VAT is at 22 percent; but it would automatically rise to 25.2 percent on Jan 1, if the country did not find new revenue resources worth 23 billion euros ($25.5 billion) with the next budgetary plan.

Mattarella's talks with parties' leaders will continue through Thursday afternoon, according to the official schedule unveiled by the president's office.

If such consultations do not deliver any political solution, the president will have to dissolve the parliament, and call snap elections in a range of 45 to 70 days.

Meanwhile, major parties began defining their own position in the crisis.

A possible deal between the M5S -- which holds the largest number of seats in both lower house and senate -- and center-left opposition Democratic Party (PD) was under the scrutiny of political analysts and media.

The two parties have harshly attacked each other in latest years, but their joining forces now could produce a majority in parliament -- with the help of minor allies -- cutting anti-immigrant League out.

On Wednesday, the PD leadership approved a resolution opening to possible negotiations with the M5S, but only on condition that five program points were respected, including "a loyal EU membership... a change in the country's (tough) migration policies, and a major shift in social and economic recipes."

The resignation of PM Conte was triggered by the League leader and Interior Minister Matteo Salvini, who in early August publicly declared the governing majority no longer existed, and it was time to "go back to voters".

Soon after that, Salvini submitted a no-confidence motion in parliament against his prime minister, claiming the cabinet's action was not longer effective due to obstructionism of the M5S.

Addressing the senate before remitting his mandate on Tuesday, Conte severely criticized the political behavior of the League leader, saying that Salvini acted on the base of personal and party motivations to the detriment of the country's interests.