Debt-laden Italy struggles to find stable govt

AP News
Posted: Mar 20, 2013 9:26 AM
Debt-laden Italy struggles to find stable govt

ROME (AP) — Trying to break through weeks of political gridlock, Italy's president began sounding out parliamentary leaders Wednesday to see if they can form a new government or if another election must be called.

February's national election revealed deep political anger in Italy and left few options for creating a coalition government tough enough to enact the economic reforms Italy needs to get it out of a stubborn recession. Italy is the eurozone's third-largest economy and has a massive government debt of about 2 trillion euros ($2.6 trillion).

President Giorgio Napolitano started two days of talks to find a way out of the impasse. If he finds no plausible prospects of a coalition with a workable majority in Parliament, a new election — perhaps as early as summer — might be the result.

But the political leaders who talked with Napolitano on Wednesday said he is determined to exhaust all efforts to form a government.

"We agreed that there is a need for a government as soon as possible" and Napolitano will explore all possibilities to achieve that, said Laura Boldrini, the new speaker for the lower Chamber of Deputies.

Center-left leader Pier Luigi Bersani emerged from the election with a comfortable majority in the lower chamber, but his forces need support from other parties to control the Senate. Bersani has rejected an offer from his rival, former Premier Silvio Berlusconi, to join with the media mogul's conservative forces to form a "grand coalition" government.

Bersani is insisting that as the largest vote-getter, he should be tapped to form a government. He has sought support from the third bloc in Parliament, the populist 5 Star Movement led by comic Beppe Grillo.

But any such arrangement could alarm financial markets and European leaders, since Grillo has advocated holding a referendum to see if Italy wants to remain in the 17-nation eurozone.

Premier Mario Monti, who heads a caretaker government until a new one can be formed, was the EU darling when he was appointed in late 2011 to keep Italy from succumbing to the sovereign debt crisis. But voters rebelled over Monti's moves to raise taxes and slash government spending, which helped keep Italy's bond prices down but failed to reverse the country's soaring unemployment.

Monti did poorly in the February election, while Berlusconi, who was forced to resign to make way for Monti amid market jitters, bounced back.

The billionaire business baron saw his center-right forces finish second in the election. He and his longtime ally, the Northern League, which refused to back Monti's austerity recipe, will be meeting with Napolitano on Thursday, followed by Bersani.

Whether Grillo's movement will come to the rescue of Italy's established political forces is anybody's guess.

So far he has dismissed any allegiance to Bersani's agenda of reform, including eliminating state funding for political parties and a new electoral law aimed at making Italy's political system more stable. Similar proposals went nowhere in the just-ended legislature.

A manslaughter conviction for a fatal car accident keeps Grillo from serving in Parliament himself, but his legislators, newcomers to politics, might decide to back Bersani on a vote-by-by basis. However, that strategy can only work if a Bersani government can win a vote of confidence to begin with — something Grillo has said his lawmakers' won't do.

To avoid another election at all costs, Napolitano could turn to an outsider if Bersani can't cobble together a viable government.

"Plan B doesn't stand for Bersani," said Mario Ferrara, heads of a small movement of southern-based politicians, after he met with the president.