The Italian impasse: an update

While Cyprus is getting the headlines, the last few days’ turmoil on the sharemarkets also has a lot to do with Italy. It’s coming up to a month since the Italian election and there’s still no new government. President Giorgio Napolitano, whose own term expires in May, is engaged in consultations with political leaders to try to find a prime minister who will be able to win the confidence of both houses of parliament.

Yesterday he met with the presiding officers of the two houses and the leaders of smaller parties. Today (that is, tonight Australian time) he will see the representatives of the three main political forces: the populist 5-Star Movement, the two centre-right coalition partners, and the centre-left Democratic Party. (The BBC’s report is here; La Repubblica has a fuller version if you can pick your way through the Italian, or use the sometimes hilarious output from Google translate.)

The centre-left has a clear majority in the lower house, the Chamber of Deputies (because the electoral system is designed that way), so if the political leaders are to form a stable government then Democratic Party leader Pier Luigi Bersani is really the only one who can do it. (See previous report here.)

But to survive, he needs to win a vote of confidence in the Senate, where no party has a majority. The centre-right’s Silvio Berlusconi has offered to go into coalition with Bersani, but for a host of understandable reasons he has rejected that option. That leaves him with only two choices: either a deal with the 5-Star Movement, or a minority government that relies on the day-to-day tolerance of the populists or the centre-right to stay alive.

The populists, led by comedian Beppo Grillo, say they want an invitation to form government themselves, with their 20-point program for radical reform. That certainly won’t happen in the short term, although Grillo may be hoping that he can bluff the establishment leaders into eventually agreeing to let him have a try rather than resort to fresh elections.

But the lesson of early elections is that voters usually punish the party seen as creating the deadlock. Grillo’s populists did well, but they still only came third – hardly a mandate to hold the whole process hostage.

The most likely outcome is that if he can’t get the support he needs in the Senate, Bersani – and it will be his decision, since no-one can put together a majority without him – will be willing to chance a fresh election. Given that, it makes sense for Grillo to cut a deal to avoid that outcome. But of course it also makes sense for him to trumpet his intransigence as much as possible in order to get the best deal possible.

In fact it’s more complicated than that, since Grillo’s caucus, most of whom have no political experience, will probably be heading in several different directions at once. There’s already been a dispute over the fact that a number of the 5-Star senators voted, contrary to Grillo’s wishes, for the (successful) Democratic Party candidate for Senate president, Pietro Grasso (whose name Google sometimes translates as “fat”).

That heterogeneity may ultimately make it easier for Bersani to win over the support that he needs, but it’s bound to give him quite a few headaches in the meantime.

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