Berlusconi Could End Up Holding the Aces After Italian Vote
Berlusconi Could End Up Holding the Aces After Italy's Election
(Bloomberg) -- Silvio Berlusconi may be banned from running for office, but he could still be the kingmaker in Italy after the March 4 election.
While the former premier’s party Forza Italia is projected to lose almost 2 million votes compared with its showing in 2013, he’s established the basis for a three-party alliance that is set to be the biggest group in the next parliament.
With infighting dogging the governing Democratic Party, the paradox of this election is that Berlusconi -- the man forced out of office at the height of the euro-area crisis as Italy struggled to avoid economic calamity -- may be the leader best placed to bring a modicum of stability.
“You have to hand it to the man, he’s 81, has a handful of votes, but he’s unified his coalition while others have been bickering,” said Sofia Ventura, a professor of politics at the University of Bologna. “Nobody will have enough votes to govern alone, so there will be a lot of negotiating and he’s likely to have a good hand.”
The latest poll by SWG in late December projected that Forza Italia and its right-wing allies the Northern League and Brothers of Italy will win 34 percent of the vote in March. The anti-establishment Five Star Movement, which has sworn off coalitions, is set to be the biggest single party at 26 percent, while the Democrats get 25 percent. Forza Italia on its own has just 15 percent.
The uncertainty surrounding Italy’s election has put equity and fixed-income markets under pressure in recent months. Within the euro area, only Greece’s 10-year bond yields eclipse Italy’s and Italian stocks have trailed Germany and France over the past three months.
The spread between Italy’s 10-year bonds and German bunds touched its highest level since October on Jan. 2. On Monday it was little changed at 157 basis points.
Berlusconi, a billionaire media owner, is reveling in the turnaround in his fortunes.
He recently tweeted that he wakes up very early, checks the papers, then walks 5 kilometers (about 3 miles) and swims 30 minutes before starting his day. He’s promised to cut taxes, the foundation of all his past campaigns, and laughed off criticism about his age.
During an interview on Radio 105 last month he joked that it’s true that he’s getting senile. “I still court ladies,” he said. “But I no longer know what for.”
Over the weekend he made his ambitions for the election clear, regardless of the 2013 tax-fraud conviction that prevents him running for office. Forza Italia unveiled its election logo, with the slogan “Berlusconi Prime Minister” -- although unless the European Court of Human Rights overturns his ban, the party leader will only be able to shape events from behind the scenes.
“In a time of uncertainty he’s a known quantity,” said Marco Caciotto a politics professor at the University of Turin. “It’s like people buying old brands in times of crisis.”
Coalition Building
Under the Italian system, it’s up to President Sergio Mattarella to consult with party leaders after the election and decide who should be asked to form a government. He is under no obligation to hand a mandate to the biggest party, and may first seek to establish whether parties can get together a coalition with enough seats to actually govern.
The latest polls suggest that not even a so-called grand coalition of the Democrats and Forza Italia would be able to form a majority, and Five Star would also need support. Another option might be for current Premier Paolo Gentiloni to lead a new government until another round of elections.
Gianluca Salford and Marco Protopapa, analysts at JPMorgan in London, said in a research note Monday that the most likely scenario is a broad coalition built around the Democrats and Forza Italia. They rated that a 60 percent chance with the second-most likely option a repeat election at 15 percent.
Economic Decline
Italy isn’t new to post-electoral horse trading or revolving door governments after 65 administrations since World War II. But in the past, flux at the top masked a deeper stability.
Of the 51 governments from 1945 to 1994, all but six were led by a Christian Democrat prime minister. But since 1994, when Berlusconi won his first election, power has swung between the center-right and the center-left while the economy has trailed behind its European peers fueling the rise of populist parties like Five Star.
“In the past there were lots of governments but more stability than met the eye. Today, it’s much more chaotic,” said Giovanni Orsina, a professor of government at Rome’s Luiss-Guido Carli University. “If polls stay as they are, it’s anyone’s guess who will form a government.”
--With assistance from Giovanni Salzano
To contact the reporters on this story: Alessandra Migliaccio in Rome at amigliaccio@bloomberg.net, Chiara Albanese in Rome at calbanese10@bloomberg.net.
To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net, Ben Sills, Alan Crawford
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