ROME (Reuters) -Italy’s two houses of parliament gave the go-ahead on Wednesday for Prime Minister Giuseppe Conte to approve a contested reform of the euro zone’s bailout fund, known as the European Stability Mechanism (ESM), at an EU summit on Dec. 10-11.

Last week some 60 rebels from the co-ruling 5-Star Movement, which has always opposed the reform, threatened to vote against the government, leaving it potentially vulnerable to defeat.

However, coalition negotiations produced a resolution which most 5-Star lawmakers agreed to, authorising Conte to approve the ESM changes while pursuing other reforms of EU financial management aimed at overturning austerity.

At the end of heated debates, the lower house Chamber of Deputies approved the resolution by 314 votes to 239, while the upper house Senate passed the measure by 156 to 129.

“This is an important confirmation of the cohesion of the coalition following a clear, pro-European line,” Economy Minister Roberto Gualtieri said in a statement.

After Conte signs off on the revamped ESM at this week’s summit, the reform, which Italy has held up for months due to 5-Star’s resistance, must then be ratified by national parliaments before it comes into force on Jan. 1, 2022.

Despite the fact he won Wednesday’s twin motions, Conte still faces bitter infighting within his coalition, particularly over the management of a multi-billion euro economic recovery plan, which could yet tear his premiership apart.

CLIMBDOWN

The resolutions approved by parliament represent a climbdown for 5-Star, which has always presented the ESM as a pernicious instrument for enforcing what it sees as outdated euro zone austerity rules, and argued that the reform only made it worse.

“We have to say clearly this is not a vote to activate the ESM and it’s not a vote to ratify the reform… It is a vote to give a full (negotiating) mandate to the prime minister,” 5-Star deputy Filippo Scerra told the Chamber.

Claudio Borghi, speaking for the right-wing League, the main opposition party, said Gualtieri could eventually be prosecuted for betraying the national interest by pursuing the ESM reform without a parliamentary mandate.

Proponents of the reform stress that it would allow the ESM to act as a financial backstop for another EU kitty, The Single Resolution Fund, set up to help failing banks.

However, 5-Star is concerned about other aspects, such as a greater role for the ESM in assessing the debt repayment capacity of countries that use the fund and in overseeing the reform programmes they must undertake. These tasks are performed jointly with the European Commission.

Above all, 5-Star opposes a change stipulating that bonds issued by euro zone states from 2022 have conditions attached that would make debt restructuring easier and more orderly.

Critics say this will also make restructuring more likely, hitting Italian savers and investors who hold most of the country’s sovereign debt, which amounts to around 160% of gross domestic product.