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Italy struggles to break government deadlock

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(Globalpost/GlobalPost)

Italy was left struggling to form a government after leftist leader Pier Luigi Bersani on Thursday lost his bid to end an impasse created by elections with no clear winner in the eurozone's third-largest economy.

Italian President Giorgio Napolitano was scheduled to hold a day of consultations with political leaders starting at 1000 GMT on Friday, as European capitals and financial markets watched warily amid renewed turbulence in the eurozone.

Bersani's centre-left coalition got the most votes in the February 24-25 elections, winning a majority in the lower house of parliament but not in the upper house -- with Silvio Berlusconi's centre-right a very close second.

Napolitano asked Bersani last Friday to try to form a government, but the ex-communist failed in his attempt to woo lawmakers from the Five Star Movement, an anti-establishment party led by former comedian Beppe Grillo that made major inroads in the election.

Bersani has ruled out a coalition government with his arch-rival Berlusconi, a scandal-tainted 76-year-old billionaire tycoon who has served as prime minister three times in a tumultuous political career spanning two decades.

Bersani's failed attempt leaves a variety of scenarios, analysts said.

One possibility is that Napolitano will choose someone from outside the party political sphere and seek to form a consensus behind his nominee -- an arrangement similar to the one that brought Mario Monti to power in 2011.

A former European commissioner and economics professor, Monti was selected by Napolitano following Berlusconi's ouster during financial market panic.

He brought public finances into line and launched important reforms but was punished at the ballot box by widespread opposition to his austerity measures.

Monti's centrist coalition came in a distant fourth in the elections.

Another possibility is that Napolitano could try to push through some kind of right-left coalition -- an option that Berlusconi's People of Freedom party has been holding out and that some in the centre-left have also suggested.

A new government needs to win confidence votes in both houses of parliament.

The Five Star Movement, which is calling for a referendum on the euro, has said it will not approve any party political government and has said it will approve legislation on a case-by-case basis.

Most analysts predict that Italy will be forced to hold new elections within months at the earliest, or one or two years at the latest, since any government is unlikely to be stable with the current three-way split of parliamentary forces.

The debt-laden country is mired in its longest recession in 20 years and unemployment has spiralled to record highs. The business community has urged political leaders to act quickly to avert impending economic doom.

Stocks have held up, however, and borrowing costs have remained far below the worrying levels reached in 2011 when Italy was on the edge of insolvency.

Monti's cabinet will remain in place until a new government is formed, although it has effectively been operating with interim powers since December.

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http://www.globalpost.com/dispatch/news/afp/130328/italy-struggles-break-government-deadlock