Napolitano Seeks to Form Government in Italy’s Split Parliament

President Giorgio Napolitano was preparing for a second day of talks with leaders of Italy’s fractious parliament as he seeks to broker a compromise on forming a government in Europe’s fourth-largest economy.

Napolitano’s task in the consultations is to determine whether Pier Luigi Bersani, the 61-year-old ex-communist who controls the lower house in parliament, can muster a majority in the Senate. If that proves unlikely, the 87-year-old head of state may pick a premier from the ranks of political newcomers or, for the second time in two years, hand the reins to an unelected technocrat until new elections.

The coalition led by the Democratic Party “did not get a full victory in the election, still it had a full victory in the lower house and it’s a majority force in the Senate,” said Bersani ally Nichi Vendola, head of the Left, Ecology and Freedom party after his meeting. “We think that the effort of presenting the country with a program and a government able to interpret the need for a change is up to Pier Luigi Bersani.”

Consensus in Italy has been hard to come by since the election last month upended the balance of power that defined parliament since 1994. Public disgust with career politicians helped split the popular vote four ways and led to the appointment of novices like Laura Boldrini, a former United Nations official and newly elected speaker of the Chamber of Deputies, to key posts.

Convincing Napolitano

“I don’t think Bersani will be able to convince Napolitano that he can form a minority government,” said Roberto D’Alimonte, a political science professor at Rome’s Luiss University. “Someone like Boldrini as premier may have a better chance.”

Napolitano will meet tomorrow with former Prime Minister Silvio Berlusconi and Five Star Movement leader Beppe Grillo before closing consultations at 6 p.m. with an appointment with Bersani. He closed today’s talks with leaders of Prime Minister Mario Monti’s Civic Choice party.

“It’s necessary to give the country a courageous and innovative government capable of confronting issues such as the cost of politics and the reform of the state, but above all a solid and stable government that doesn’t make Italy, its companies and its families pay the price of non-politics and a non-government,” Andrea Olivero, spokesman for Monti’s coalition, said after meeting Napolitano.

Tapping Monti

Italy is under pressure to come up with an administration as borrowing costs rise and the crisis in Cyprus renews speculation on a euro breakup. Napolitano, whose seven-year term ends May, turned to academia the last time Italy needed a premier. In November 2011, he appointed Monti, then president of Milan’s Bocconi University, with a mandate to tame the deficit and shield Italy from the debt crisis.

This time with a deepening recession and fractured base of voters, Napolitano needs a government capable of stimulating the economy and reforming the electoral law to make it easier for one party to garner a majority in parliament.

Italy’s 10-year bond yield fell 9 basis points to 4.64 percent. Even with today’s decline, the yield is up almost 20 basis points since the Feb. 24-25 election.

Bersani has no clear path to government as talks have stalled with both of the rivals who, individually, are capable of contributing to a majority in the Senate. Grillo, who ran on a platform of sweeping established politicians from power, has called Bersani a “dead-man talking” and refused to make a deal. With three-time premier Berlusconi, who was sentenced in October to four years in prison for tax fraud, it’s Bersani who has rejected compromise.

‘Bed with Berlusconi’

“If Bersani gets into bed with Berlusconi, he’s finished,” James Walston, a politics professor at Rome’s American University, said of Bersani. “He knows that if there are going to be snap elections he has got to keep as much distance as possible from Berlusconi.”

Berlusconi said today in a television interview with Italia 1 that he would tell Napolitano that “only a stable, and authoritative government that could emerge from cooperation between the PDL and the PD can take the steps needed by the country.”

The offer was rejected by Enrico Letta, deputy head of the PD, who said that Berlusconi was being hypocritical after having brought down the Monti government, which had been supported by a PD-PDL alliance.

Courting Grillo

Bersani renewed his appeal to Grillo by Boldrini, a member of Vendola’s Left, Ecology and Freedom, saying on Twitter Inc. that she and Grasso would take 30 percent pay cuts and impose savings measures on other parliamentary officials.

“In this new political climate, and with returning financial market pressure, there may be scope for unprecedented alliances and solutions,” Riccardo Barbieri, chief European economist at Mizuho International Plc, said today in a research report.

Bersani won his first showdown in the new Senate on March 16 when he passed over long-time ally Anna Finocchiaro for the speakership and proposed Grasso, a former mafia-fighting prosecutor who, like Boldrini in the Chamber, is a political neophyte. Grasso was confirmed with a plurality of the Senate, including members of Grillo’s party.

Bersani will need an absolute majority in a confidence vote to form a government.

The speakership vote “does not bode well for political stability,” Wolfango Piccoli, Eurasia Group’s head for Europe, said March 18 in a research report. “Bersani still appears unlikely to muster enough votes to survive a confidence vote in the Senate.”

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