Napolitano Vows to Find Compromise Creating Italy Government

Italian President Giorgio Napolitano pledged to continue efforts to broker a parliamentary compromise aimed at giving the country a new government and denied he’s thinking about resigning.

“I have come to the conclusion that, even though I am left with very limited options to help the formation of a government, I can until the last day at least try to create the most favorable conditions toward unblocking a political situation hardened by irreconcilable positions,” Napolitano said today at a press conference in Rome. He will create two teams to try to identify common ground on policy, he said.

Napolitano is responsible for appointing the next prime minister and must find a leader capable of bringing together a majority of lawmakers in a divided parliament. The 87-year-old head of state, whose seven-year term ends May 15, has struggled to build a consensus among lawmakers since elections last month left the upper house split into three blocs.

Italy’s La Repubblica newspaper reported today that Napolitano was considering resigning to make it easier for his successor to form a government. Presidents in the final stages of their mandates aren’t permitted to dissolve parliament and call new elections, an option that would be available to the next incumbent.

Economic Stimulus

Italy needs a government with a majority in parliament to pass economic stimulus measures and guard against bond-market speculation in the wake of the financial crisis in Cyprus. Italian Prime Minister Mario Monti, who remains in office until a new government is installed, can’t count on a majority in parliament and has said he is eager for his mandate to expire.

Italy is stuck in its fourth recession since 2001, and each of the top three political forces has proposed tax cuts aimed at spurring growth. Investors, who buy more than 30 billion euros ($38 billion) of bonds each month to finance Italy’s debt, are counting on a deal that will ensure a government strong enough to pass measures to boost the economy and manage the budget.

Napolitano is seeking the help of the two teams after failing to broker a compromise when he met individually with leaders of the four biggest parliamentary groups yesterday. The members of the teams may be announced today, the president’s office said.

Five Star

The traditional balance of power in parliament was upset by the emergence this year of the euro-skeptic Five Star Movement, headed by ex-comic Beppe Grillo. Five Star won a quarter of the votes in the Feb. 24-25 election, preventing either Pier Luigi Bersani’s Democratic Party or former Prime Minister Silvio Berlusconi’s People of Liberty party from securing the Senate.

Napolitano took charge of negotiations on March 28 after Bersani failed to muster a majority.

“I will continue to act in the interests of the country until the final day of my mandate, without hiding the difficulties I’m still facing, and reiterating my confidence in the chances of working through this crucial time for Italy,” Napolitano said.

Before it's here, it's on the Bloomberg Terminal.