Another One
By this writer's count, Italy is about to elect its 64th national government since it established itself as a democratic republic immediately after World War II. Political dysfunction, alive and well in Washington, is taken to a whole new level in Italy.
In this upcoming election, on February 24-25, the main players include an ex-Communist (Luigi Bersani), a comedian who campaigns from a van (Beppe Grillo), a nationalist from northern Italy who rails against many, including the citizens in the south of his own country (Roberto Maroni), an anti-Mafia magistrate (Antonio Ingroia), the leftist President of Apulia (Nichi Vendola), a disgraced former Prime Minister who has risen again (Silvio Berlusconi), and the current, non-elected technocrat Prime Minister (Mario Monti), an economics professor and former European Commissioner.
Prime Minister Monti was forced to dissolve his emergency government in December, when former Prime Minister Berlusconi's right-wing party People of Liberty (PdL) abruptly withdrew its support. Mr. Berlusconi, who had presided over Italy for much of this century's first decade, had himself been forced to resign in November 2011, when crucial allies deserted. Confidence in Italy's sovereign bonds had collapsed, and the country's economy was staggering through a multi-year, double-dip recession. GDP per capita in real terms was at that point lower than it was in 1999, extraordinary for a rich European country, and quite a legacy for Mr. Berlusconi.
Prime Minister Monti had begun the long process of fixing Italy, by aiming directly at an extremely over-regulated economy (even by European standards). Pension, tax and labor-market reforms were being implemented or planned, and control over public finances was underway (Italy's outstanding public debt is almost 130% of GDP, the highest in the euro zone), all with the ultimate goal of restoring international competitiveness by reigniting productivity, and instilling economic growth to reverse the relentless rise in unemployment, particularly among the young.
All this will now need to wait. Watch for a new centre-left government to emerge, led by Mr. Bersani. Final polling last week showed his Democratic Party (PD) in the lead, though Mr Berlusconi's PdL was (astonishingly) narrowing the gap. A Bersani government, though quite different from Mr. Monti's, could be a reasonable outcome (Bersani exhibited reformist zeal as Economics Minister in a previous Italian government). Moreover, word is that, depending on results in Lombardy and Sicily, he may, or need to, invite Mr. Monti and his centrist supporters to join a coalition government, thereby securing a majority in the Senate, and imparting greater overall legitimacy and competency to the new government. The worst-case scenario would be a win by Mr. Berlusconi's party in the Chamber of Deputies, but not the Senate, making it impossible to form the 64th Italian government. This cannot be dismissed - months of uncertainty, market pressures (on the euro and bond yields), and yet another election, would ensue.