A Victory - for the Status Quo
Even by its own political standards, there was a remarkable development in Italy over the weekend.
In a sixth round of voting over four days, a large majority of Italian parliamentarians from both chambers (738 from a total of 1,007 members) finally agreed on something, voting to re-elect a new President (who, under normal conditions, plays a mostly symbolic role n Italy). But, for the first time in the 65-year history of the Italian republic, the incumbent President is to be the new President. Giorgio Napolitano, 87 years old and set (reports suggest, desperate) to step down from his one-term Presidency on May 15, reluctantly - wearily - agreed to another term - after the leaders of the left-leaning Democratic Party (PD), Luigi Bersani, and the conservative People of Freedom (PdL), Silvio Berlusconi, ran out of options and begged him to stay. Rumors are circulating that in saying yes, Mr. Napolitano has extracted concessions from the principal political party leaders that they agree to form a new coalition government. Sensing this momentum, Giorgio Squinzi, the leader of Italy's business lobby, Confindustria, added his support yesterday, urging the formation of a coalition government, without which the country would be "condemned to prolonged economic recession". Italian financial markets, apparently looking for any news at all that the post-election, 2-month Italian political deadlock could be coming to an end, have rallied, with the 10-year bond yield falling back to just above 4%, and the Italian FTSE MIB stock index up as much as 2% in today's trading.
But such optimism is ill-founded. Forming an Italian government has, if anything, become even more difficult. Mr. Bersani's PD party, the largest group in the Chamber of Deputies, is now fractured, after some members revolted against each of Bersani's original candidates for the Presidency, Franco Marini and former Prime Minister Romano Prodi. Both Mr. Bersani, seen until recently as the most likely prime minister, and the PD's president, Rosy Bindi, were thus forced to resign over the weekend. A break-up of the PD party - an always uneasy coalition of former communists and Christian Democrats - is a possibility. On the right, Mr. Berlusconi, whose future is threatened by four court cases in which he is a defendant, may nonetheless feel emboldened by the rebellion in the PD, thus lessening any pressure to form a grand coalition. And Mr. Monti, who led the previous technocrat government, and who had started down the long road of structural reform of the economy, is deeply unpopular, having garnered barely 10% of the vote in the February elections.
The weary President-elect Napolitano may have no choice other than to call for another national election, and/or to install another caretaker government. Initiating a fix of the Italian economy would thus have to wait.