President Giorgio Napolitano, a former communist resistance fighter who negotiated Silvio Berlusconi’s resignation, is preparing his final political battle as he seeks to steer Italy out of its latest government crisis before his term expires in May. Napolitano, 87, is charged with resolving the political logjam caused by elections last month that produced a hung parliament. To avoid a new vote, he can try to forge a national- unity government, accept an administration without a majority or appoint a non-politician to head a so-called technical government, similar to that of Prime Minister Mario Monti. Markets are pricing in two scenarios, “another technical government or the possibility, which is less and less likely, of a bipartisan government,” Mario Spreafico, who manages 1.5 billion euros ($1.95 billion) as chief investment officer at Schroders Private Banking for Italy, said in a phone interview. “Both would be temporary solutions” before new elections.” The Feb. 24-25 ballot, which left front-runner Democratic Party leader Pier Luigi Bersani short of a majority in the Senate, has forced him to court the support of former comedian Beppe Grillo and his anti-establishment Five Star Movement, which won a quarter of the vote. Grillo responded by describing Bersani as a “dead man walking,” stressing his party would not give backing to any government. Italy’s 10-year bond yield has risen 21 basis points since the vote to 4.66 percent.
That rejection leaves Bersani two options — try to secure Napolitano’s blessing to form a minority government or he can seek to forge a broad coalition with three-time premier Silvio Berlusconi, who won a blocking minority in the Senate. The two did manage to collaborate in backing the Monti government for 13 months, though relations soured during the election campaign.
The chances the two could bury their differences were complicated by accusations last week by Senator Sergio de Gregorio that Berlusconi paid him 3 million euros to switch to Berlusconi’s party in 2006 and help bring down the government of Prime Minister Romano Prodi. Bersani served as Prodi’s industry minister.
Bersani told party leaders yesterday he wouldn’t seek the backing of Berlusconi and announced a limited legislative program in a bid to form a minority government. His proposals include easing austerity in favor of growth policies, stronger anti-corruption laws, more rigorous conflict-of-interest rules and steps to reduce the size and cost of government. Those initiatives would probably appeal to Grillo’s lawmakers, who campaigned against corruption and political waste.