Parties may struggle to form government in Italy
Rome: A center-left group of parties appears to have the best shot at forming a coalition government in Italy after an inconclusive national election, but the challenge is steep and comes amid public anger over austerity measures.
If Italian parties fail to form a governing coalition, new elections would be required, causing more uncertainty and a leadership vacuum, and that possibility has rattled financial markets across Europe.
Pier Luigi Bersani and his center-left allies appeared yesterday to have won a narrow victory in the lower house of parliament, while the Senate looks split with no party in control.
Silvio Berlusconi, the former Italian premier whose center-right coalition did better than expected, is a key player since his coalition is now the second-biggest bloc in the upper chamber.
Comic-turned-political leader Beppe Grillo, whose 5 Star Movement capitalized on a wave of voter disgust with the ruling political class, had a surprisingly strong showing. His bloc of seats in Parliament could prove crucial in making any coalition government viable.
The two-day election on Sunday and Monday also was a clear rejection of the previous technocratic government led by Mario Monti. That government enacted wide-ranging reforms to the budget and the economy. Though its borrowing rates have fallen in financial markets, the cost to Italians has been high, with Italy mired in recession and unemployment on the rise.
Berlusconi has already ruled out an alliance with Monti, his predecessor, whom he blamed for driving Italy deeper into recession.
A few seats in Parliament based on Italians' voting abroad still remained to be decided, but their numbers won't ease the gridlock. European leaders pleaded with politicians in Italy to quickly form a government to continue to enact reforms to lower Italy's critically high debt and spare Europe another spike in its four-year financial crisis.
Bersani said he was not opening talks with any potential partners until he submits his program to Italy's president, who taps a candidate to form a government.
Stinging from a loss of some 4 million votes compared to the last election in 2008, Bersani hasn't yet identified who he could try to form alliances with. But top officials in his Democratic Left (PD) party were quick to rule out any deal with Berlusconi.
Schulz suggested that austerity measures to reduce debt
and fiscal deficit alone will not be enough to overcome the economic woes in Italy and several other EU countries.
In his view, a combination of budgetary discipline and strategic investments is required to promote growth, stabilise the economy and tackle growing unemployment, especially among the young people.
German Foreign Minister Guido Westerwelle called upon Italy's main political parties to form a stable government as soon as possible. It is not only in the interest of Italy, but also in the interest of Europe as a whole that a stable government is formed in Rome, he said in a press statement.
Italy plays a central role in the on-going efforts to overcome the European debt crisis. Therefore, its EU partners expect that a new government will continue the policy of fiscal consolidation and reforms. What is decisive now is that a stable government could be formed as speedily as possible, Mr. Westerwelle said.
In Brussels, a European Commission spokesman said the commission has taken note of the outcome of the Italian elections. It is now up to the country's President to take the next steps to form a new government. The commission has full confidence in the Italian democracy and the capacity of the political parties to stablish a majority that will continue to deliver growth.
"The commission will work with the new government to promote growth and to create new jobs. Italy needs them urgently in order to reduce its debts to a sustainable level. Unfortunately, the level of Italy's debts is so high that it puts a break on growth and jobs," the spokesman said.
He commended the course of PM Monti's government during the last 15 months.
"The commission sticks to its position that the reforms introduced by Monti's government were the right steps to scale down the country's huge debts.
Therefore, the commission continues to demand that Italy has to reduce its debts to promote growth and employment," the spokesman said.
He denied that the commission is forcing unpopular austerity measures on the Italian people.
"We are trying to ensure the stability of Italy's banking system so that the country's economy can benefit from the internal markets as well as to promote an ambitious industrial policy, especially for the SMEs, to foster growth and to generate new jobs," the spokesman said.