Italy on Financial Brink as “Former” Communist Tries to Lead

While much of world attention has focused, understandably, on Pope Benedict XVI’s February 11 resignation announcement, another resignation and election in Italy are at the center of global financial concerns. When Italian Prime Minister Mario Monti (shown) resigned in December 2012, he set in motion the process for general elections, which took place February 24-25. The results of the election have been indecisive, to say the least, with no party gaining a majority in the parliament, and no candidate for prime minister commanding a clear mandate. Pier Luigi Bersani, the ex-Communist Party leader who now heads the Democratic Party, scored a narrow victory in the Chamber of Deputies, the lower house of Parliament, but was unable to come up with a majority in the upper house, the Senate. Bersani is now scrambling to fashion a workable coalition with opponents. Unless and until he does that, Italy, the eurozone’s third largest economy and the world’s eighth largest economy, is faced with a “hung parliament,” without a prime minister and without a government.

Nouriel Roubini, the New York University economist known as "Dr. Doom," said the election results “make Italy ungovernable. It is political, economic and financial chaos.” He is not alone in that assessment; many predict that Bersani will be unable to pull together a workable coalition and that Italian voters will have to go back to the polls again within six months.

Bersani’s Democratic Party/Italy Common Good leftist coalition took 29.5 percent of the national vote. The People of Freedom coalition led by billionaire media mogul and three-time prime minister Silvio Berlusconi, claimed 29.1 percent of the vote. The wild card that upset all expectations is the populist, anti-establishment Five Star Movement, a recent phenomenon launched by comedian Beppe Grillo, who struck a chord with millions of Italian voters by attacking and exposing the corruption in both the Berlusconi and Monti governments. Grillo’s Five Star Movement took 25.5 percent of the vote. Mario Monti’s outgoing Civic Choice coalition won the support of only 10.5 percent of voters.

Grillo has said his party would not back a confidence vote on a new government formed by any of the mainstream parties. He has called for new elections, which he may expect would bring even more voters to his banner. Having already exceeded the expectations of most analysts, and with disgust among Italian voters for the corruption and scandals of the current parties, it’s likely that Grillo’s vote tallies would swell in a rematch.

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