The recent announcement of Pope Benedict XVI’s retirement took the spotlight away from the elections currently happening in Italy. However, the results of the race for prime minister will certainly have repercussions in Europe as well as across the Atlantic.
While the crisis in Europe has turned the focus on Greece over the past few years, a bigger concern for many was the financial stability of Italy. It is the eighth largest economy in the world in terms of GDP and third in the Eurozone. Tweet stat: Tweet
The debt burdened country — second highest after Greece — was on the brink of bankruptcy which could have meant the end of the euro and another global economic meltdown.
However, the disaster was avoided in 2011 after Mario Monti, a technocrat and economist, was sworn in as prime minister. Mr. Monti implemented $100 billion in austerity measures, including tax hikes, pension reforms, and cuts in public administration which restored the markets as well as faith in Italy’s economy.
However, this has also plunged the country back into recession; unemployment rose as well as popular discontent.
However the renewed faith in Italy’s economy and these reforms could be in jeopardy after Monday’s elections. Mr. Monti’s return to power, which would be the option preferred by both Berlin and Washington, is very unlikely. His centrist coalition is running fourth, according to the latest poll numbers.
Pierluigi Bersani, head of a center-left coalition between the Democratic Party and the more left-leaning Ecology Freedom Party, had been well ahead in the polls for months. However, his lead has been on a gradual decline. With little taste for communication, the unflashy leader has refused to make any electoral promises, leaving the door open to the other candidates to woo voters.
The eternal Silvio Berlusconi, leading a center-right coalition, has been doing what he has done over and over for the last two decades: charm the Italians with a mixture of populism and hyper-mediatization.
His latest feat was sending a letter promising to cancel and repay an unpopular estate tax, which gave the government $20 billion in revenues, to the inhabitants of a number of swing regions. Berlusconi’s coalition is currently in a close second.
The surprise contender is Beppe Grillo, leader of the Five Star Movement (M5S) and Italy’s most famous blogger. With a demagogued discourse on the euro and the corruption of the political class, he used popular discontent to rise to the third place in the polls.
The most probable result is a victory for the centre-left coalition in both the Chamber and Senate, but with a scarce majority in Senate. However, Pierluigi Bersani will likely make an alliance with Monti’s centrist coalition to increase their majority in the Senate and form a government.
This scenario, which would allow Mr. Monti’s participation in the government, could reassure the markets and the world’s major economies. However, the wider the coalition, the higher the risk of governmental collapse.
A good performance by either Berlusconi or Beppe Grillo in the election would create more ambiguity with regards to Italy’s foreseeable future. In any case, Monday’s result will be watched with apprehension from Washington to Beijing.