Why Much Is at Stake in Italy's March 4 Elections

Italy’s all-too-familiar postwar brew of government dysfunction, economic stagnation and toxic debt has investors worried again, even as the specter of populist revolt recedes elsewhere in Europe. The next parliamentary elections in the euro region’s third-biggest economy, now scheduled for March 4, will test stress points including the country’s ambivalent relationship with the single currency, its towering debt and a troubled banking system still trying to dispose of decade-old poisonous holdings.

It will be a crucial test for the anti-establishment, euroskeptic Five Star Movement, especially since a new electoral law encourages parties to build alliances. Five Star is challenging the ruling center-left Democratic Party of Prime Minister Paolo Gentiloni. So is a possible center-right coalition of the Forza Italia party of ex-premier Silvio Berlusconi, the euroskeptic and anti-migrant Northern League and the small, far-right Brothers of Italy; that bloc won regional elections in Sicily in November. But polls have shown that none of these three groups may have the support to win a parliamentary majority on its own. So the elections could end up with a hung parliament, lingering uncertainty, and a reappointment of Gentiloni until fresh elections.