Italy's Bersani Struggles To Overcome Election Stalemate

by
Reuters
Italian centre-left leader Pier Luigi Bersani was left with only slim hope of forming a government after last month's deadlocked election as talks with rival party leaders ended with a further rejection from Beppe Grillo's 5-Star Movement.

* Bersani to report to President Napolitano Thursday

* Grillo heaps on insults as 5-Star rejects approach

* Speculation of accord to allow election of president

Italian centre-left leader Pier Luigi Bersani was left with only slim hope of forming a government after last month's deadlocked election as talks with rival party leaders ended with a further rejection from Beppe Grillo's 5-Star Movement.

The impasse in Italy has been closely watched by investors mindful of the turmoil which brought down Silvio Berlusconi's government in 2011 and was reflected in rising borrowing costs at a closely watched bond auction on Wednesday.

Without an agreement, the country could be headed for fresh elections, adding to the uncertainty facing the euro zone which is battling to contain the crisis in Cyprus.

The rebuff by 5-Star was expected as the anti-establishment group has always said it will not back the parties it blames for Italy's social and economic crisis but it was given added spice by an insulting blog post put up by the fiery ex-comic Grillo.

Bersani said he would report to President Giorgio Napolitano on Thursday and called on all parties to "accept their responsibilities" and allow a government to be formed, but there was little sign of movement from the other parties.

"There are no conditions that would allow us to give a confidence vote to a government made up of these parties because they have no credibility," 5-Star's Senate leader Vito Crimi said after meeting Bersani.

Some parliamentarians still held out hopes of some form of deal with the centre-right that would allow the election of a new president of the Republic acceptable to former prime minister Silvio Berlusconi's bloc to succeed Napolitano, whose term ends in May.

However for the moment, Italy remains in political stalemate after the election, in which Bersani's alliance won a majority in the lower house of parliament but not in the Senate, leaving it unable to govern on its own.

The main marker of investor confidence, the spread between Italian 10-year bonds and their safer German counterparts has widened sharply this week.

"Risks for Italian debt remain very high in the coming weeks," said Annalisa Piazza, a market economist with Newedge in London.

"Although Bersani's consultations with other political leaders might lead to a grand-coalition government, markets are aware that such a government will not last long," she said.

If he cannot reach an agreement, Napolitano may appoint a respected outsider to try to form a technocrat government or a broad cross-party coalition. If that fails, Italy faces the prospect of a return to the polls, possibly within months.

INSULTS

Adding insult to injury, Grillo later posted an entry on his popular blog calling mainstream politicians including Berlusconi and Bersani "old whoremongers... who gaily take the piss every day with their daily appeals for governability".

Bersani has ruled out forming a coalition with Berlusconi's centre-right, the second largest force in parliament, which says an alliance of the two main political forces is the only way to give Italy a government.

He also downplayed talk of a deal over the presidency, a central demand by Berlusconi's People of Freedom (PDL) party.

"It hasn't been put to me in those terms. You can't speculate about any deal over the government and the office of president of the Republic," Bersani said.

Bersani had hoped to gain support from the 5-Star Movement for a limited platform of institutional and economic reforms and he said Grillo's party would have to justify its refusal to support a government in parliament. However Grillo's comments appear to have ended any prospect of an accord.

As hopes of a deal faded, the Northern League, junior partners in Berlusconi's centre-right alliance, said an agreement should still not be ruled out if Bersani was prepared to accept conditions laid down by the centre-right.

"The decision is: is it credible for the PDL and the League not to oppose the formation of the government? I don't know how probable it is but it's possible under certain conditions and we told Bersani this yesterday," League leader Roberto Maroni said.