Another Italian General Election Might Be Needed ASAP

The Italian General Election was concluded on February 25, 2013. It is for the election of 315 members of the Senate and 630 member of the Italian Chamber of Deputies. From the preliminary results, Italians were faced with confusion. In the Chamber of Deputies, the majority of seats were won by Italy Common Good, a center-left alliance headed Pier Luigi Bersani of the Democratic Party.

The new party (third) is the Five Star Movement, an anti-establishment party, founded by Beppe Grillo, a comedian. The second party is a center-right alliance, The People of Freedom, headed by Silvio Berlusconi, a former Prime Minister. The fourth is Civic Choice, led by the outgoing Prime Minister, Mario Monti. However, no party or political alliance won a majority seat in the Senate. As such, a hang parliament now exists. And the naming of the new prime minister hangs on a balance.

It was very clear that the austerity measures promoted by the Monti government were very unpopular, and his party was easily beaten by a newbie, the Five Star Movement. Even with the strong election results of the newest party, analysts are still worried, as the party does not have any track record and they are uncertain as to how the party will perform.

Nuisance Party?

Is the Five Star Movement considered a nuisance party? It became very popular, maybe because the leader is a known celebrity. Giuseppe Piero Grillo, commonly known as Beppe is a blogger, an actor and a comedian. He is also anti-euro. His party’s win ensured that there is no majority winner in the Senate, resulting in a deadlock in a government where laws have to be approved by the Senate and the Chamber.

Market reaction

With the stalemate, most of Europe is watching. The election results had an immediate impact as global and Italian shares immediately fell and there is already a significant drop in the euro’s value as a result. Market analysts are saying that the yields of Italian bonds are showing upward mobility, which indicates the investors are becoming uncertain. Likewise, the Italian market opened on February 26 with a downward trend. It is being predicted that the downward trend is likely to continue until the political stability in Italy is settled.

Coalitions

Economists believe that a coalition, even it if could be risky should be formed to break the deadlock. Former investment banker Douglas Elliot believes that a Berlusconi-Bersani coalition might be a solution, but it could be unstable. This could mean that Berlusconi, a very controversial figure, who has had about 20 court cases, including sex scandals, could come back to government service and Bersani could be appointed as the Prime Minister. This is still uncertain as their combined seats would still not be enough to form a majority.

Quandary gets deeper

Pier Luigi Bersani, whose party won the majority seats in the Lower House (Chamber) throws a challenge to Five Star Movement leader, who has been vocal about reforms to join a coalition, to break the deadlock and show the constituents what he and his party can do. However, Grillo, on February 27, has just ruled out the thought of joining any coalition, saying that the grand coalition should be between the Democratic Party and Berlusconi. This announcement deepens the country’s political dilemma because Berlusconi, with all the scandals, is deemed as a criminal by the Democrats.

This could mean that if nothing gets resolved, a new election, as early as March is very likely. The big question then is, where do all of these leave Italy and its people?