Update on the Italian Election

There is still no new government for the Italian Republic since the parliamentary elections in February in which no party gained a majority in both chambers.

The center-left party, despite winning a majority in the lower house of parliament, has been unable to form a government because it was unable to gain a majority in the upper chamber.  It tried to form a coalition with the third-place-finishing populists, but the upstarts’ leader ruled out a compromise with any of the other parties.  A half-hearted attempt by the center-left to form a grand coalition with the center-right, which came in second, also failed.  The centrists have expressed a willingness to form such a coalition, but they came in a distant fourth, thereby winning too few seats to be kingmakers.

Meanwhile, the term of the President, Giorgio Napolitano, whose assent is required for a government to be formed, is coming to an end in mid-May.  He has insisted he will not seek another term, despite the hung parliament.  Instead, Napolitano has appointed ten sages to propose proposals intended to gain a consensus and propose electoral reform, according to ANSA, the Italian news agency, as a way to avoid the dissolution of parliament by his successor – a power he lacks within the last six months of his term – and the calling of a second parliamentary election.

As of the time of this posting, ANSA is reporting a possible planned meeting between the center-left and the center-right to form a grand coalition to break the deadlock, or at least to come to a consensus on a new president.  Stay tuned for updates.

Italy’s political stalemate has taken on global significance because of the continued fiscal crisis of the European Monetary Union.  A new, stable government that could continue to reduce Italy’s debt, but also spur economic growth, would reassure the markets.