Thursday

5th May 2016

Italy in turmoil after election delivers hung parliament

  • Grillo has emerged as kingmaker in the Senate (Photo: kbytesys)

Italy was plunged into turmoil on Monday (25 February) after parliamentary elections delivered a hung parliament with firebrand comedian, Beppe Grillo, holding the balance of power.

The political paralysis, which seems certain to see Italians going to the polls for a second time, threatens to drag the eurozone's third largest economy back into crisis.

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With nearly all votes counted, the centre-left coalition led by Pier Luigi Bersani's Democratic party (PD) had claimed a narrow victory in the polls for both chambers of the Italian parliament but was left well short of a majority in the Senate.

After claiming 31.6 percent compared to 30.3 percent for Italy's populist former leader Silvio Berlusconi, the Democratic party was set to claim 123 Senate seats, to Berlusconi's 118.

Grillo's FIve Stars Movement took 53 seats on 24 percent, while the centrists led by EU-backed technocrat Mario Monti got only 19 seats. With 158 members needed for a Senate majority, Grillo's anti-establishment party would hold the balance of power.

Control of both parliamentary chambers is required to sustain a government.

Meanwhile, Bersani was set to claim a majority in the lower house after defeating Berlusconi by a narrow 29.7 percent to 29.1 percent margin. Under Italian election law, the biggest party in the Chamber of Deputies is awarded 54 percent of the seats.

The strong performance of three-time prime minister Berlusconi, who is currently standing trial over allegations that he had sex with an underage prostitute, came as a surprise, but the big winner was Grillo's Five Star Movement.

Grillo, a stand up comedian, whose party was set up on the Internet in 2009, told La Stampa that "in three years we have become the No 1 party in Italy. Nobody can beat us."

He has tapped into widespread public dissatisfaction with Italy's political establishment, and has no intention to serve in a coalition government, added that "the only solution is a PD-PDL alliance".

The Democratic party issued a statement that "a second round of voting is not the solution," while Monti insisted that "a government must be guaranteed."

The early elections were triggered in December when Berlusconi's Freedom party (PDL) withdrew its parliamentary support for Monti's technocratic government.

The results are a disaster for outgoing technocratic PM Mario Monti, whose centrist coalition was relegated to a distant fourth place.

Monti, a former European Commissioner, had been widely praised in Brussels for restoring stability to Italy, which was on the brink of needing a bailout when Berlusconi was ousted in November 2011.

The vote also deals a huge blow to Bersani, who had promised to stick to the reform programme of Monti alongside targeted measures to stimulate job creation.

Initial exit polls had pointed to a 5-7 point win for Mr Bersani. Senior EU officials had also been quietly hoping for a government led by Bersani and Monti.

Despite the Monti reforms, which are expected to see Italy run a balanced structural budget in 2014, the country remains deep in recession, with Greece the only EU country to have a bigger debt burden.

The uncertainty filtered through to the financial markets, with the euro hitting a six week low of 1.31 against the dollar. Meanwhile, yields on Italian 10 year bonds edged up four basis points to 4.49 percent.

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