This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.nytimes.com/2013/02/27/world/europe/split-vote-in-italy-brings-political-deadlock.html

The article has changed 6 times. There is an RSS feed of changes available.

Version 2 Version 3
Italian Parties Maneuver After Electoral Split Inconclusive Vote in Italy Invites New Wave of Financial Instability
(about 9 hours later)
ROME —  Markets dropped and Italians awoke on Tuesday to headlines screaming “Ungovernability” and “Hung Parliament” a day after national elections to replace the technocratic government of caretaker Prime Minister Mario Monti failed to produce a majority capable of governing the third-largest economy among those using the euro currency. ROME — In recent years, recession and financial turmoil have felled governments throughout Europe as voters looked for change in an era of economic distress. Now, in a worrying reversal, political dysfunction appears to be capable of snuffing out the sparks of economic revival on the Continent.
 Former Prime Minister Silvio Berlusconi hinted that his center-right People of Liberty Party might be inclined to form a grand coalition with the center-left Democratic Party of Pier Luigi Bersani, a prospect that would be ideologically contradictory but which, experts said, might be the only governing coalition possible, given the outcome of the ballot. After its voters this week denied any party enough backing to form a credible government, Italy joined Greece in preventing establishment parties from achieving the mandate required to push through painful reforms, inviting new financial instability.
 Results indicated that the Democratic Party would have a majority in the lower house, the Chamber of Deputies, thanks to a premium of bonus seats given to the largest bloc. But it would only have about 119 seats in the Senate, compared with 117 seats for Mr. Berlusconi’s party, far short of the 158 required to govern. That dynamic is quite familiar to Americans, who have watched President Obama and the Republican-controlled House of Representatives lock horns over the debt ceiling, the so-called fiscal cliff and now sequestration in what many experts consider the biggest threat to the economy.
 Under Italy’s electoral law, front-runners are awarded bonus seats in the lower house based on national totals and in the Senate based on regional total, which can produce split results. That happened on Monday when Mr. Berlusconi’s party won by about three percentage points in the powerful Lombardy region after it formed an alliance with the Northern League Party. Increasingly, experts on both sides of the Atlantic are asking whether politicians in some advanced nations, faced with high debts, aging populations and slower growth, are capable of promoting plans that offer a way out of the malaise — or whether they could be elected if they did.
 The outstanding success of the elections was the Five-Star Movement of comedian Beppe Grillo, which led a grass-roots and Web-based campaign and won more votes than any other party, with about 25 percent of the ballot. The group drew support from a powerful protest vote as Italians from both right and left — and the wealthier north and poorer south — were drawn to Mr. Grillo’s opposition to austerity measures and appeal to oust the existing political order. It has indicated that it is not inclined to form a governing alliance with Mr. Bersani or Mr. Berlusconi. “The governing parties tilt ever more toward populism instead of making decisions that are important but unpopular,” said Eckhard Jesse, professor of political systems and institutions at the Chemnitz University of Technology in Germany.
Analysts said earlier that the best-case scenario would be a shaky coalition government, which would once again expose Italy and the euro zone to turmoil if markets question its commitment to measures that have kept the budget deficit within a tolerable 3 percent of gross domestic product. News of the stalemate sent tremors through the financial world, sending the Dow Jones industrial average down more than 200 points on Monday and shaking confidence again on Tuesday, when the Italian stock market fell by some 4.5 percent. In Italy, the surprise success of the Five Star Movement, founded by the comedian Beppe Grillo, has dashed hopes that the recent calm in financial markets was anything but a brief pause.
Although analysts blamed the large protest vote on Italy’s political morass and troubled electoral system, the results were also seen as a rejection of the deficit-reduction strategy set by the European Commission and the European Central Bank for a country deemed too big to fail and too big to bail out. “We will change everything,” said Nicoletta Febbraro, 57, a self-described “flower child” and follower of Mr. Grillo’s, elected to the regional council in Lazio Region outside Rome.
“No doubt Italy has an imperfect political culture, but this election, I think, is the logical consequence of pursuing policies that have dramatically worsened the economic and social picture in Italy,” said Simon Tilford, the chief economist of the Center for European Reform, a London research institute. The uncertain outcome of the election in Italy is only the latest illustration of how a sclerotic system has become increasingly fragmented, leaving fragile multiparty coalitions incapable of bold gestures and holding the reins of power only tentatively.
“People have been warning that if they adhere to this policy there will be a political cost, there will be backlash,” he added. “It couldn’t have taken place in a more pivotal country.” The question remains whether the phenomenon is a natural outgrowth of the financial crisis and its aftermath or representative of a permanent shift, driven by demographic changes that have forced difficult policy choices, new technologies that have put the quick formation of mass movements within reach and an electorate with no patience for missteps or difficult reforms.
In an election marked by voter anger and low turnout, the Democratic Party had appeared late Monday to be leading in the lower house with 29.6 percent with 99 percent of the votes counted and in the Senate with one-third of the votes counted. On Tuesday, Pier Luigi Bersani, leader of Italy’s left-wing Democratic Party, called on the Five Star Movement to work with others to govern the country, rather than just calling for the existing politicians to go home. “Until now, they’ve been saying: ‘Everyone go home.’ But now they’re here, too,” he said. “So either they should go home as well, or say what they want to do for their country and their children.”
Mr. Berlusconi’s party led in several populous regions that carry more Senate seats, potentially giving him veto power and raising the prospect of political gridlock. The Democratic Party, which campaigned against austerity, managed a relatively strong showing, finishing first in the lower house, although not in the Senate. The country’s caretaker prime minister, Mario Monti, had been praised across Europe for his steady hand and willingness to try to reform the economy. Voters disagreed, giving his fledging civic movement about 10 percent of the vote, enough only for a fourth-place finish.
The election offered a stinging defeat for Mr. Monti, the caretaker prime minister, a newly minted politician whose lackluster civic movement appeared to win around 10 percent in both houses. “Grillo had a devastating success; the rest of the situation is very unclear,” said Stefano Folli, a political columnist for the daily business newspaper Il Sole 24 Ore. Blindsided by the success of the Five Star Movement, Italy’s leading political parties struggled on Tuesday to find a governable majority. While the Democratic Party won in the lower house, it was the center-right party of former Prime Minister Silvio Berlusconi that came back from the grave to take control there. And so far, Mr. Grillo has shown no signs of moderating his position about forming alliances with the mainstream parties his people were elected to repudiate.
Either the Democratic Party and the People of Liberty Party “will form a grand coalition committed to reforms and changing the electoral law, which would be very difficult, or Italy will be ungovernable,” Mr. Folli added. Gripped by economic and social malaise, voters are in a repudiating sort of mood. More and more people are casting their ballots against mainstream parties, choosing protest votes even when they know the fringe groups are unlikely to govern better, said Peter Filzmaier, professor for democracy studies and political research at the Danube University Krems, in Austria.
Mr. Monti’s government remains in place with full powers until a new government is formed. Appearing on television on Monday evening, Mr. Monti said he felt “tremendous regret” that during his tenure the political parties were not able to change Italy’s electoral law so as to guarantee more political stability. “It is a great responsibility of the political forces, and one of the reasons for the disaffection and distance from and the revindication of the political class,” he added. “We are experiencing a phase where it is enough for a party to be different for it to win votes,” Mr. Filzmaier said. “It could be the Pippi Longstocking party. It makes no difference.”
Under Italy’s complex electoral laws, it is extremely hard for any one party to gain a strong ruling majority needed to manage an economy with rising unemployment and a credit crunch, let alone push through structural changes to the ossified economy. Instead, the parties have resisted change to protect their own power bases. When they are not expressing their outrage at the ballot box, people are taking to the streets. In Bulgaria last week, the prime minister resigned in the face of nationwide protests.
The results of this election would appear to represent new depths of gridlock, and few experts expected any party to form a governing coalition strong enough to prevail for long. Nicolas Véron, an economist and a senior fellow at Bruegel, a research institute based in Brussels, said that regardless of who ultimately controls the levers of government, “the key question is whether we can have serious structural reform.” Nor is the phenomenon restricted to Europe. In Israel, Prime Minister Benjamin Netanyahu has struggled for weeks to set up a coalition in a newly elected Parliament where 48 out of 120 lawmakers are new and where the defiant Yesh Atid Party won 19 seats.
Italy “was a work in progress before the elections,” Mr. Véron added, “and I think investors understand that it will remain a work in progress for some time.” Traditional politicians, representing entrenched interests, are ill equipped to address the root of the problems, making the people even more contemptuous. And the upstart parties appear to have no solutions either, aside from turning over an old system that has fed distrust of the political class.
When he came to power in November 2011, after Mr. Berlusconi stepped down amid intense market turmoil, Mr. Monti was praised for restoring international confidence in Italy. Although he won plaudits from European leaders and President Obama, Italians disliked him for raising the retirement age and taxes. “There’s a sense that the old politics, in whatever form and whatever country, have reached the limits of their ability to cope with a world that seems to be spiraling out of control,” said Yossi Klein Halevi, a senior fellow at the Shalom Hartman Institute in Jerusalem, a research institute.
“Taxes, taxes and more taxes, that’s what voters remember the most from Monti,” said Stefano Sacchi, a professor of political science at the University of Milan. “When he stopped being a technocrat and became a politician, he came under fire for the same issues Italians blame other politicians for.” In Greece, where austerity measures imposed by foreign lenders have helped collapse the real economy, the leftist Syriza party nearly won national elections last May, prompting a second round in which European leaders sent a strong message: if Syriza was elected, Greece would be kicked out of the euro.
While Mr. Monti said repeatedly that if Italy managed to make its economy more competitive, taxes could eventually be lowered, his message was drowned out in the final days of a chaotic campaign by Mr. Grillo’s anti-austerity message — his party may even decide to hold a referendum on whether Italy should remain in the euro zone — as well as by Mr. Berlusconi’s antics. Today, Europe has more mechanisms to protect the single currency, and Syriza — with its charismatic young leader, Alexis Tsipras — is almost neck-and-neck with the governing center-right New Democracy party in polls. The party has a strong anti-austerity line and has criticized the established parties as tainted by cronyism and corruption.

Gaia Pianigiani contributed reporting from Rome, and Nicola Clark from Paris.

The duration and depth of the problems have made them more difficult to stomach. The farther away solutions seem, the farther afield voters look for solutions.

Gaia Pianigiani contributed reporting.