Anti-Monti 5 Star Set to Be Sicily’s Third-Biggest Party

Italy’s anti-austerity movement polled first in Sicilian regional elections that were marked by low turnout and the threat of gridlock as no political coalition won an outright parliamentary majority.

In a vote that could serve as a barometer for the national elections due by May, Beppe Grillo’s 5 Star Movement got 14.8 percent, according to data from over 80 percent of polling stations posted on the region’s website today. That makes it the biggest political force in Sicily, though its candidate for governor was running third. The Democratic Party, or PD, received 13.4 percent of the vote and former premier Silvio Berlusconi’s People of Liberty got 12.2 percent.

Giancarlo Cancelleri, the 5 Star candidate for governor, placed third with 18.2 percent. Backed by a coalition including the PD and the Union of Centrists, Rosario Crocetta won 31 percent and probably will be nominated governor. Nello Musumeci, supported by the People of Liberty and smaller parties, garnered 25.2 percent. No party or coalition on the ballot would get a majority in the 90-seat regional parliament, making it even more difficult to manage Sicily’s finances.

The election results come as investors fret over Italian Prime Minister Mario Monti’s weakening powerbase. Italian bonds fell the most in more than a month after Berlusconi threatened on the eve of the vote to withdraw support for Monti’s caretaker government, a move that could trigger early elections.

Rating Downgrade

Fitch Ratings downgraded Sicily’s long- and short-term ratings with a negative outlook, citing “expectations of a prolonged period of budgetary deficits amid growing financial and commercial liabilities in a context of resources drained to maintain the healthcare sector roughly in balance.”

The vote took place yesterday in Italy’s poorest region, where the jobless rate is almost twice the national average of 10.6 percent and where organized crime saps economic growth. The early election was called after the resignation of regional President Raffaele Lombardo, who was indicted for alleged links with the Sicilian mafia.

More than half of Sicily’s eligible voters didn’t cast ballots. The turnout when the polls closed yesterday at 10 p.m. was 47.4 percent, according to the region’s website, compared with 66.7 percent in 2008. Final results won’t be available until later today.

‘Non-Conventional’

“Despite the low turnout, the results suggest that there is a growing anti-austerity sentiment coupled with a move toward non-conventional political forces,” Biagio Lapolla, a rate strategist at Royal Bank of Scotland Group Plc in London, said before the vote. “This could be a negative for confidence ahead of next year’s national elections.”

Should Berlusconi’s party drop its support of Monti, President Giorgio Napolitano may be forced to call an early vote before May. That may fan Europe’s debt crisis, as the premier’s mix of higher taxes and public spending cuts has contributed to a decline in the financing costs of the euro region’s second- biggest debt.

The yield on Italy’s 10-year yield, which has dropped more than 200 basis points under Monti’s administration, advanced 12 basis points today to 5.02 percent. Still, borrowing costs dropped today at an auction of 8 billion euros of six-month bills.

“Threats to withdraw support can’t be made to this government,” Monti said today at a press conference in Madrid when asked about Berlusconi’s challenge. “You can’t call it a threat because, and I think I speak for my fellow ministers, the only thing it would take away is a government that we didn’t ask for.”

Austerity, Corruption

While reducing Italy’s debt-financing costs, Monti’s austerity drive helped the 5 Star Movement emerge in opinion polls as Italy’s second-biggest political force. In local elections last May, the 5 Star won four mayoral seats in northern Italy, including the city of Parma.

“One cannot deny that Grillo has arrived, and in a big way,” Pier Luigi Bersani, head of the Democratic Party and front-runner in the national race, said today, according to ANSA news agency.

Since June, the total support for parties backing Monti, including the Democratic Party and the People of Liberty, has fallen below 50 percent in most polls. Those parties hold more than two-thirds of the seats in both chambers of the Parliament elected in 2008.

Political power in Italy is up for grabs as the dominant parties of the last two decades also struggle to shake the taint of corruption.

Earlier this month, Monti’s government disbanded the city council of Reggio Calabria in southern Italy to end alleged infiltration by criminal groups. That decision followed the arrest of a local government member of the Lombardy region in the north by prosecutors for allegedly buying votes from the ’Ndrangheta, the Calabrian mafia. The region’s governor, Roberto Formigoni, is being investigated for corruption in a separate inquiry and denies any wrongdoing.

Sicilian Theatrics

The theatrics around elections in Sicily, with more than 4 million registered voters, showcased the outsiders and establishment forces vying to replace Monti. Newer voices such as that of Grillo, a former comic turned political gadfly, used the race in Sicily to show policy makers at the national and European levels that voters are poised to repudiate austerity.

It remains to be seen whether the movement of Grillo, who swam the 3.5 kilometers (2.2 miles) from the mainland to Sicily to open the election campaign in Italy’s poorest region, can turn his anti-austerity stance into votes elsewhere in the country. Elections in the regions of Lazio and Lombardy will take place in January.

Unelected Monti was named prime minister last November after Berlusconi resigned amid legal woes and as the Italian benchmark 10-year bond yield topped 7 percent. Within weeks, Monti passed 20 billion euros in austerity measures, overhauled the pension system and embarked on changing labor-market rules in the euro region’s third-biggest economy.

To contact the reporter on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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