Italy seeks to resolve election deadlock
The Italian stock market fell and state borrowing costs rose today as investors took fright at political deadlock after a stunning election that saw a protest party lead the poll and no group had a clear majority. Photograph: Max Rossi/Reuters
Italy's stunned political parties looked for a way forward today after an election that gave none of them a parliamentary majority, posing the threat of prolonged instability and European financial crisis.
The results, notably by the dramatic surge of the anti-establishment 5-Star Movement of comic Beppe Grillo, left the centre-left bloc with a majority in the lower house but without the numbers to control the powerful upper chamber, the senate.
Financial markets fell sharply at the prospect of a stalemate that reawakened memories of the crisis that pushed Italy's borrowing costs toward unsustainably high levels and brought the euro zone to the brink of collapse in 2011.
"The winner is: Ingovernability," ran the headline in Rome newspaper Il Messaggero, reflecting the deadlock the country will have to confront in the next few weeks as sworn enemies are forced to work together to form a government.
Pier Luigi Bersani, head of the centre-left Democratic Party (PD), has the difficult task of trying to agree a "grand coalition" with former prime minister Silvio Berlusconi, the man he blames for ruining Italy, or striking a deal with Mr Grillo, a completely unknown quantity in conventional politics.
The alternative is new elections either immediately or within a few months, although both Berlusconi and Bersani have indicated that they want to avoid a return to the polls if possible: "Italy cannot be ungoverned and we have to reflect," Mr Berlusconi said in an interview on his own television station.
For his part, Mr Grillo, whose "non-party" movement won the most votes of any single party, has indicated that he believes the next government will last no more than six months.
"They won't be able to govern," he told reporters today. "Whether I'm there or not, they won't be able govern."
He said he would work with anyone who supported his policy proposals, which range from anti-corruption measures to green-tinted energy measures but rejected suggestions of entering a formal coalition: "It's not time to talk of alliances... the system has already fallen," he said.
The election, a massive rejection of the austerity policies applied by prime minister Mario Monti with the backing of international leaders from US President Barack Obama to German chancellor Angela Merkel, caused consternation across Europe.
"This is a jump to nowhere that does not bode well either for Italy or Europe," said Spanish foreign minister Jose Manuel Garcia-Margallo.
In a sign of worry at the top over what effect the elections could have on the economy, Mr Monti, whose austerity policies were repudiated by voters who shunned his centrist bloc, met the governor of the central bank, the economy minister and the European affairs minister to discuss the situation today.