Italy's Gentiloni Says Election Campaign Is `Imminent'

(Bloomberg) -- Prime Minister Paolo Gentiloni said Italy’s election campaign is “imminent” as President Sergio Mattarella prepared to dissolve parliament on Thursday, triggering a national vote probably in March that could spark a long period of political turbulence.

Gentiloni, speaking at a traditional end-of-year news conference in Rome, said Italy had managed to avoid “an abrupt end” to the five-year legislature “at a very delicate time in which the economy and our society in general were licking their wounds after a long recession.”

The prime minister will meet Mattarella Thursday afternoon, paving the way for elections probably on March 4, according to a state official who couldn’t be named discussing confidential matters. Mattarella is expected to sign a decree ending the legislative sessions in both houses of parliament. The date of the vote will be chosen by the government also on Thursday.

Hung Parliament

The euro zone’s third-biggest economy, whose recovery is trailing most of its peers, risks a hung parliament after the ballot. Opinion polls show the anti-establishment Five Star Movement, which wants a consultative referendum on abandoning the euro if European Union treaties aren’t renegotiated, leading Gentiloni’s Democratic Party and groups in a possible center-right coalition that would include former Premier Silvio Berlusconi’s Forza Italia.

But neither Five Star, the Democrats headed by former Prime Minister Matteo Renzi, nor the center-right bloc would win a parliamentary majority, according to the surveys. A possible “grand coalition” of the Democrats and Forza Italia would not have a majority either.

“It’s virtually certain that we won’t have a clear majority,” said Sergio Fabbrini, director of the school of government at Luiss University in Rome. “The talks to verify whether a new majority can be formed could last until the summer. In Germany, the talks have dragged on for ages, and in Italy we may end up with about twice as many parties in parliament as in Germany.”

65th Government

Five Star wants Mattarella, whose task is to appoint a premier, to give it a mandate to try to form a government -- Italy’s 65th since World War II -- if it wins the most votes. However, Five Star has ruled out creating a coalition, saying it would instead seek external backing for its policies from all political forces.

Mattarella is under no obligation to hand a mandate to the leader of the party which comes out on top, the state official said. The president may first seek to establish whether parties can agree on a coalition with enough seats to govern, the official added. Mattarella’s options also include reappointing Gentiloni to lead a new government until fresh elections.

Berlusconi said at a book presentation in Rome on Dec. 13 that “the most correct solution” if no party obtained a majority in the election would be to keep the Gentiloni government and start another electoral campaign of at least three months “to allow parties to make their programs known to voters.”

Grand Coalition

Berlusconi is appealing to the European Court of Human Rights against a ban on running for public office that resulted from a 2013 tax-fraud conviction. The multi-billionaire has denied all wrongdoing.

“If several parties including Forza Italia accept Gentiloni, he’d ensure Italy has a voice if Emmanuel Macron gets his drive for EU reform off the ground, once Angela Merkel is back in power,” Fabbrini said. The French president’s EU plans include laying the foundations for more financial integration of the euro area.

At his news conference, Gentiloni side-stepped a question on whether he could serve at the head of a “grand coalition” after the vote. “Anything I say would be used against me,” he said. “I hope that my political group will obtain a great result and that this allows the formation of a government.”

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