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The Italian System Thwarts Five Star After Election Success

The Italian System Thwarts Five Star After Election Success

(Bloomberg) -- The votes are counted, mostly, and Italy’s politicians have begun the long hard slog of coalition negotiations. So this will be the final installment of our pop-up newsletter. Sign up to our global politics newsletter Balance of Power to follow the story from here. 

Luigi Di Maio won a historic result for the anti-establishment Five Star Movement. But as John Follain reports, turning that into a governing majority is a whole new challenge. 

The latest tally (ballots are still being counted) shows Five Star will have 221 seats in the lower chamber, almost 100 short of a majority under a new electoral system that was designed to reward parties that are prepared to cut deals. That’s a problem for Five Star, which has sworn off coalitions, but now finds itself in desperate need of allies. Di Maio’s party has common ground with the anti-immigration League on revoking a pension reform and pushing back against the European Union. But League leader Matteo Salvini has his own ambitions to be prime minister. And his party has only 73 seats to bargain with anyway. 

The Italian System Thwarts Five Star After Election Success

The Interior Ministry’s preliminary results show the center-right coalition will have 260 seats in the lower house, Five Star 221 seats, center-left coalition 112 seats, and Free and Equal 14 seats. That means no group is near the 315 required for a majority

Matteo Renzi said he would quit as head of the Democratic Party but won’t leave until a new government has been formed. The PD has the votes to put either Five Star or the center-right coalition into office, but Renzi ruled out any agreement with “extremists.” He didn’t mention Berlusconi’s Forza Italia, but the mainstream parties did so poorly even together they fall well short of a majority.

Berlusconi was the other big loser on Sunday and he was the only party leader not to hold a press conference afterward. He met the League’s Salvini near Milan and said in a terse statement that he hopes the center-right gets the mandate to form a government. Berlusconi and the League had an agreement that whichever party got the most votes within the coalition had the right to name the prospective prime minister. But all polls had suggested that would be Forza Italia in the lead, not the League.

Tensions between Berlusconi and Salvini are likely to mark any ongoing alliance between their parties. The League leader used his press conference yesterday to take another swipe at the euro – “it’s bound to come to an end,” he said. Berlusconi has ruled out a euro exit.

Quote of the day: “We’re in a chicken pen and there are two roosters, and they both want to be the head rooster. Only one can be around.” Marco Elser, head portfolio manager at Lonsin Capital Ltd, on Di Maio and Salvini.

The Italian newspapers are digesting the result. La Stampa says the EU is worried and Moscow is happy over the outcome. Messaggero says many in the PD are unhappy that Renzi’s resignation isn’t immediate. 

For Bloomberg columnist Leonid Bershidsky, Sunday’s result wasn’t as big a break from the past as it seems. 

The Italian stock market rose as much as 1.1 percent in early trading today, erasing yesterday’s losses. Tim Craighead and Lauren Douillet at Bloomberg Intelligence say Italy can still be an engine of European growth. Still, the election result is likely to put a stop to any further reform, Lorenzo Totaro and Kevin Costelloe explain

In case you missed it: these three people will be key to fixing Italy’s political mess, Di Maio is trying to court investors without losing his base, and here’s why Italy’s voters were in such a bad mood.

To contact the authors of this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net, Kevin Costelloe in Rome at kcostelloe@bloomberg.net.

To contact the editor responsible for this story: Ben Sills at bsills@bloomberg.net, Alessandra Migliaccio

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