Berlusconi: The Greatest Comeback Since Lazarus?

Only in Italy... exit polls suggest Silvio Berlusconi’s political comeback took an important step forward in the Sicilian elections on Sunday. Expulsion from public office, tax fraud, sex scandals and open heart surgery cannot stop 81-year old Silvio playing a major role in Italy’s political circus. Berlusconi campaigned hard in Sicily and Nello Musumeci, backed by center-right parties, including Berlusconi’s Forza Italia (Go Italy!), is expected to win when vote counting takes place today. The governing center-left party was beaten into third place behind the populist 5-Star party. According to Reuters.

The center-left, led by Matteo Renzi’s ruling Democratic Party, looked certain to finish a distant third after internal feuding wrecked its chances of retaining power on the Mediterranean island that it had governed since 2012.

 

RAI state television said Nello Musumeci, backed by center-right parties, including Berlusconi’s Forza Italia (Go Italy!), would win between 35 percent and 39 percent of the vote.

 

The 5-Star’s Giancarlo Cancelleri was seen taking between 33 and 37 percent.

 

Another exit poll for private broadcaster La 7 put Musumeci on 36-40 percent and Cancelleri on 34-38 percent.

 

The center-left’s Fabrizio Micari was seen 20 points behind the frontrunner in both surveys, followed by Claudio Fava, the candidate of a cluster of left-wing parties.

 

The vote count will begin on Monday at 8 a.m (0700 GMT) and Musumeci’s lead is inside the pollsters’ margin of error.

This was Berlusconi campaigning with Nello Musumeci, courtesy of the FT.

Musumeci served as a junior labour minister under Berlusconi and campaigned on job creation, better use of EU funds and voters’ frustration with the long-standing mafia connections in Sicilian politics.

Berlusconi aside, the Sicilian elections are significant as they are viewed as a useful barometer for next year’s Italian General election. While there seems little doubt that the result will be a hung parliament, it looks increasingly like the center-right coalition, which Berlusconi is instrumental in developing, will win the most seats. From the FT.

The vote in Sicily, a region of more than 5m people, marks a key test of the political winds in Italy ahead of a general election due as early as March 2018, and had drawn all the top party leaders to the island in recent weeks for campaign rallies...

 

Gianfranco Micciché, one of Mr Berlusconi’s closest allies in Sicily, was already speaking triumphantly.

 

“Six months ago everyone took for granted that Five Star would win. We did a miracle,” he said.

 

The strong result for Mr Musumeci is likely to encourage Mr Berlusconi to strengthen his alliance with Matteo Salvini, the leader of the anti-immigrant, anti-euro Northern League, and Giorgia Meloni, the leader of the far-right Brothers of Italy party, ahead of the next election.

Sicily looks like being a setback for 5-Star, even though it is expected to win more votes than any other single party. Forza Italia is expected to poll second with less than half the seats. 5-Star had been hoping that Sicily would see it win power in one of Italy’s regions for the first time. To that end, new leader, Luigi Di Maio, had campaigned energetically on the island since the Summer.

For the center-left and former Prime Minister, Matteo Renzi, this was a striking, but not unexpected defeat.  As the FT explains.

Lorenzo Guerini, a top official in the PD, said that his party was looking at a “widely expected, yet clear and undeniable defeat”.

 

But Mr Renzi will also face pressure to patch up his relations with the Italian left if he wants to compete with the centre-right and the Five Star in 2018. Since Mr Renzi took over the party in late-2013, he has faced heavy resistance to his reformist agenda from within the party, which led to a series of damaging defections from left wing dissidents this year.

Nationally, the PD is just behind 5-Star, which has 28% support. In the center-right bloc, Forza Italia and the anti-immigrant, Northern League, have 14% each, while the far-right Brothers of Italy have 5%. As media outlets emphasised, much of the Sicilian election campaign focused on the personalities of those involved, rather than the “big issues”, like the economy, jobs and immigration. Ironically, we suspect that Mr Berlusconi will revel in such a situation if it continues in the upcoming national election campaign. Besides cementing the alliance between his Forza Italia, Brothers of Italy and the Northern League, we will be watching as Berlusconi seeks to overturn the ban on his running for public office. Berlusconi, of course, denies any wrongdoing.

Three Of Italy's Top Four Political Parties Seek A New Parallel Currency

Authored by Mike Shedlock via MishTalk.com,

In a bid to appeal to the growing anti-euro sentiment in Italy, three of Italy’s biggest political parties seek a dual currency.

Italy’s leading opposition parties are calling for the introduction of a parallel currency to the euro, which they say will boost growth and jobs.

Three of the country’s four largest parties – the Five Star Movement, the Northern League and former prime minister Silvio Berlusconi’s Forza Italia – have proposed introducing a new currency following an election scheduled for next year.

The proposals for a parallel currency have replaced the opposition parties’ previous calls to leave the euro completely.

By settling on a dual currency, analysts say the parties hope to appeal to anti-euro sentiment in the country while avoiding, for now, the upheaval of an outright exit.

A poll by the Winpoll agency in March showed that only around half of Italians back the euro.

As the election nears, and with opinion polls currently pointing to a hung parliament, only the ruling Democratic Party is not proposing changes to the current euro set-up.

Next General Election

The next Italian General Election is due to be held no later than May 20, 2018.

Key Players

• M5S – Five Star Movement – Beppe Grillo, a comedian. The M5S is variously considered populist, anti-establishment, environmentalist, anti-globalist, and Eurosceptic. The “five stars” are a reference to five key issues for the party: public water, sustainable transport, sustainable development, right to Internet access, and environmentalism. In foreign policy, the M5S has disapproved military interventions of the West in the Greater Middle East (Afghanistan, Iraq, Libya) as well as any notion of American intervention in Syria.


• PD – Democratic Party – Matteo Renzi, former prime minister. The PD’s main ideological trends are thus social democracy and the Italian Christian leftist tradition.


• Northern League – Lega Nord – Matteo Salvini. Under Salvini, the party has emphasized Euroscepticism, opposition to immigration, and other “populist” policies, while forming an alliance with nationalist and right-wing populist parties such as France’s National Front, the Netherlands’ Party for Freedom and the Freedom Party of Austria at the European level.


• Forza Italia – Forward Italy – Silvio Berlusconi, a four-time Prime Minister. Under Berlusconi, FI’s long-time coalition partner was Lega Nord.

Silvio Berlusconi is prone to flip-flops and would likely do anything if it brought him back in power. However, PD + FI will likely not come close to 50%.

Early Elections?

On May 30, Bloomberg reported Italy Moves Toward Early Vote as Election Law Deal Nears

Italy’s biggest parties are considering a proportional system similar to the German model with a 5 percent cut-off for smaller parties, and lawmakers are due to discuss a first draft of the new law early next month. An agreement would remove any hindrance to snap elections, eliminating the need to wait for scheduled elections in early 2018.

Ultimately, it’s up to Italian President Sergio Mattarella to make the call on when to dissolve parliament. According to Italian newspapers including Corriere della Sera, Mattarella would prefer to let the government of Prime Minister Paolo Gentiloni, 62, a soft-spoken diplomat and Democratic-Party ally of Renzi’s, stay in power until next year.

While an early vote would put an end to a legislature that already saw three governments in power amid palace coups and constitutional-referendum defeats, a proportional system runs the risk of producing a hung parliament. An election this year would come at a delicate time for Italy, with its banking woes unresolved and the budget law for 2018 still to be approved.

The proposed new law “would likely not facilitate an outright victory by one of the three major political groups” resulting in a hung parliament, said LC Macro Advisers Ltd. founder Lorenzo Codogno who sees the likelihood of early elections at 60 percent.

That deal fell and I can find no other recent references regarding early elections.

Left Crumbles

On June 26, the Guardian reported Italy’s Centre-Right Wins Big in Mayoral Elections as Left Crumbles

An alliance of Silvio Berlusconi’s Forza Italia party and the anti-immigrant Northern League won 55% of the votes in Genoa, the northern port city that was a leftwing stronghold but which the right will now govern for the first time in more than 50 years.

PD leader Matteo Renzi, 42, who has been seeking to make a comeback since stepping down as prime minister in December, was the clear loser in Sunday’s vote.

The centre-left has governed Italy for four years, during which time the economy grew by only half the eurozone average. Three different PD premiers have struggled to shore up a banking system strangled by bad loans, and to manage half a million migrants who came by boat from north Africa.

Sunday’s vote – the second round for cities where no one candidate won more than 50% two weeks ago – is one of the last before a general election due by the end of May 2018, but it may not be a reliable indicator of what will happen then. The first-past-the-post voting system used at the municipal level, which favours coalitions, may not be replicated at a national level, where a proportional system is now in place.

Genoa is the latest of a string of defeats in the PD’s traditional strongholds. Last year it lost Turin, Italy’s fourth-largest city, and the capital Rome, both to the Five Star Movement (M5S), which was founded only eight years ago.

M5S, which opinion polls say is slightly more popular than the PD nationwide, performed very badly in the first round of voting on 11 June and made the run-off in only one of the 25 largest cities. It added eight mayors to its modest tally.

“We now have 45 mayors, up from 37 before, which is an increase of 20%,” M5S founder Beppe Grillo said on his blog. “Every damned election we are growing and that is what counts.”

Two Things

M5S, NL, and FI appear likely top a combined 50%, perhaps easily. That does not necessarily mean a coalition will form.

The two things and possibly the only two things that unite the Five Star Movement, the Northern League, and Forza Italia are a desire to crush Matteo Renzi and a desire to get Italy off the Euro.

And when it comes to Berlusconi’s views on the euro, one has to question his sincerity. He has changed his position many times.

Mapping The World's Great Divides: "Chasms Are Widening Too Fast And Too Much"

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

Something hit me this week. The maps which came out on Monday and detailed the outcome of the French elections, were telling a story, and a familiar one by now. A story of deep division. There are a number of such maps now depicting the Brexit vote in the UK, the US presidential elections, and its French counterpart.

In all three cases they leave me wondering something along the lines of: ‘Are you guys sure you want to remain in the same country with each other?’ Because to me that is not all that obvious, and I think it’ll get less so as time passes. For instance in the case of France, the ‘ideological’ differences between Macron and Le Pen are substantial to say the least, they’re worlds apart.

And if you’re worlds apart, why live in the same country? Here’s that French map:

As you see, the country is sharply divided between west (Macron) and east (Le Pen). So much so that you wonder what these people still have in common, other than their language. There’s no doubt it’s also a dividing line between the richer part of the country, and the poorer.

Thing is, that same dividing line is visible in a similar map of the November 8, 2016 US election results, in a slightly different way.

In the US it’s not east versus west, it’s coast versus interior (flyover land). But the difference is equally clear and sharp. In fact, probably what we’re looking at is that France has only one coastline, while the US has two, and in both countries people living close to the ocean are on average richer than those who live more inland.

And in both cases there is no doubt that wealth is a deciding factor in dividing the nations to the extent that they are. We see that in an ‘urban versus rural area’ comparison as well. Cities like New York, LA and Paris are strongholds for the incumbent and establishment, the parties that represent the rich.

There can be no doubt that we’ll see more of that going forward. It won’t be there in smaller countries, Holland for instance is not nearly large enough for such dynamics. But Italy very well might. It’s always had a strong north-south-divide, and its present crisis has undoubtedly deepened that chasm.

Looking at things that way, it’s also glaringly obvious that Macron is Obama (and is Renzi is Cameron etc.). A well-trained good looking mediagenic puppet with a gift of teleprompter gab, fabricated and cultivated by the ruling financial and industrial world to do their bidding. Macron, to me, looks the most artificial of the crop so far, the Obama, Rutte, Cameron, Renzi crop. There will be more, and they will get more artificial. Edward Bernays is just getting started.

Of course there is also a strong move away from established parties. It is more pronounced in France -where they were eradicated at least in the presidential elections- than in the US or UK, but that may be more of a superficial thing. Trump and Bernie Sanders are simply America’s version of France’s ‘ultra’ right wing Le Pen and ‘ultra’ left wing Melenchon. And Trump is running into problems with the remnants of the established parties as much as Macron will if he’s elected president.

Anglo countries seem to take longer diversifying away from tradition than others, but they too will get there. The various deteriorating economies will make sure of that.

A third map is of the UK Brexit vote. Once again, a sharp division, and once again with a ‘character’ of its own. If you ignore Scotland for a moment, what you see is blue=poor and yellow=rich. Broad strokes, I know, but I’ve been doing that with the first two maps too. There are only a few pockets of yellow=rich=remain. But yeah, fewer people live there. Same thing as in the US and France.

That the whole Brexit thing should now be negotiated by the Tories is a cynical irony the country owes to its adherence to tradition. That is how that backfires, too little flexibility. How the UK will solve its many ignored issues is anyone’s guess. Will Scotland leave the no-longer-very United Kingdom? Will voters wake up in time to not present the Tories with a free hand to make the rich-poor divide even worse?

There’s one more, and more detailed, map of France, which shows even better to what extent ‘Le Pen country’ is eerily similar to America’s flyover land. It’s almost poetic, a poem about how countries fall apart, about centers that cannot hold. It also makes me think of a locust invasion, by the way.

Every French and European body and their pet hamster is presently telling voters in France to please please not vote for Le Pen, in a move that resembles similar calls against Trump and Brexit. And who knows, it might work this time around. The anti-Le Pen frenzy is even stronger than the others, and it has Marine’s crazy father to use as a warning sign.

But as these maps show, it’s not about Le Pen, or Trump, or Nigel Farage. It’s about people being left behind in ever larger numbers, susceptible to voices other than the ones they’ve known for a long time and who never listened to them. And nothing is being done to address these people’s claims; on the contrary, things are only getting worse for them.

I saw a headline today that said ECB president Mario Draghi’s “Stimulus Could Blunt Populism as Unemployment Declines”. There’s only one possible reaction to that: what happens when he stops his stimulus?

The growing divides that all these maps bear witness to will keep growing, unless someone decides that neo-liberalism has gone too far. But the only person who could make such a decision would have to be one who neo-liberalism itself has made rich and powerful. So don’t count on that happening.

Count instead on more Trumps and Le Pens and Sanders’s. And also on more Obama’s and Macrons for the rich to deploy to protect their power and hold on to their riches. Increasingly it would seem they have to limit democracy -even further- to remain in power. So count on that happening too.

But don’t count on all these countries surviving as sovereign nations. The chasms are widening too fast and too much.

Italy Falls Out Of Love With The Euro: Beppe Grillo Resurgent In The Polls

Authored by Mike Shedlock via MishTalk.com,

Recent polls for Italian politicians supporting the eurozone and EU have collapsed.

Pro-Europe polls are highly likely to get worse as a  further splintering of Matteo Renzi’s PD party takes place.

It is not out of question for Beppe Grillo’s eurosceptic Five Star Movement (M5S) party to achieve an absolute majority in the next election. However, please note that 40% is the threshold for a “majority”.

The Financial Times reports Italy is Falling Out of Love with Europe.

Foreigners often underestimate Italy’s ability to sidestep calamity. That said, the stakes are higher now than in 1992. Solutions may prove harder to find. The reason lies in the radically different EU and Mediterranean contexts in which Italy finds itself.

Some of contemporary Italy’s challenges appear similar to those of the early 1990s. The party system is once again in fragments. The ruling centre-left Democratic party (PD) split last month. The right is divided. The most popular opposition party is the anti-establishment Five Star Movement. Since November 2011 four prime ministers have taken office not because voters chose them, but because of a financial emergency, factional squabble, party coup and failed constitutional reform.

Matteo Renzi, the former premier and PD leader, suffered a blow this month when it emerged that Tiziano Renzi, his father, and Luca Lotti, a close political ally, had been caught up in a judicial probe into suspected graft in public procurement.

The most disturbing comparison between 1992 and the present day concerns the Italian economy, which is projected this year to be the slowest-growing in the eurozone. Public debt is more than 132 percent of gross domestic product. Unemployment is almost 12 per cent; the youth jobless rate is over 37 percent.

As a consequence, ever more Italian politicians question the merits of eurozone membership. So do Italian voters. In a Eurobarometer poll published in December, 47 percent called the euro “a bad thing” for their country and only 41 percent “a good thing”. This is the big difference with 25 years ago.

As long as the moderate left or right governs Italy, it may be possible to contain this disenchantment with the EU and the euro. But the PD’s fissures are the latest sign that the party system is cracking under the strain. The Five Star Movement is waiting in the wings.

PD Suicide

Via email, Eurointelligence comments on the costs of Matteo Renzi’s PD’s suicide mission.

We have been saying it for a while – political parties that preoccupy themselves with their internal divisions are electorally doomed. It is happening to the Labour Party in the UK, and it is now happening to the Partito Democratico. This tendency is now being picked up by the polls, which show the Five Star Movement ahead of the PD by five points. We are now at the point where it becomes increasingly improbable for the PD to regain power after the next elections. They cannot do it on their own, and they do not have natural coalition partners to help them. Even a hypothetical alliance between Matteo Renzi and Silvio Berlusconi would not, on its own, meet the 40% majority threshold for a coalition, and there is no way the two parties would enter the election with a pre-arranged electoral pact in the first place.

The Five Star Movement is now only 6 points away from an absolute majority that would allow it to govern on its own – assuming that the present electoral law for the chamber of deputies forms the basis of a new electoral system for the Senate. If one adds up all the non-extremist parties (and let’s count Berlusconi’s Forza d’Italia among them for the sake of argument), one would get to just over 40% – with the PD, Forza Italia, and the New Centre Right of foreign minister Angelino Alfano which only gets 2.8%.

Worse for the PD, its support will fall even more after the split of the party becomes a reality – which it will before the elections. The poll puts the hypothetical support for PD dissidents at 7.1%, which would reduce the PD’s overall support to under 20%. The new left, together with the old left, would have the support of close to 10%. All this shows that there can be only two election outcomes: either a fragmented parliament, with unstable and shifting coalitions, or a majority reign of the Five Star Movement. The Five Star Movement promises not to enter coalitions, and it will be interesting to see whether the party maintains that position after the elections.

On the issue that interests us the most – Italy’s future in the EU, and in the eurozone in particular – the picture is even more grim. The only two parties that unconditionally support Italy’s membership of the eurozone are the PD and the New Centre Right. Forza Italia is toying with the idea of a parallel currency, while the Five Star Movement has pledged a consultative referendum on Italy’s future in the euro. While this referendum can legally not end Italy’s membership in the eurozone, it would send a devastating signal to the outside world.

The Five Star Movement has its own share of scandals – for example involving the new municipal government in Rome, and the party is in an internal state of war over the candidate for the mayoral elections in Genoa. But none of that seems to stick.

Our conclusion is that the Five Star Movement is rational to avoid alliances with other parties, as this approach is paying off electorally. With that strategy in place, they will either gain a sufficient majority (over 40%) at the next elections, or in the one after that.

Italian Polls

Eurointelligence referenced a specific Italian poll that has been since superseded.

However, support for PD is clearly on the wane. Let’s take a look at all of the recent Italian Election Polls.

In only one poll since March 9 (clearly an outlier) did Matteo Renzi’s PD party come in first place. Moreover, PD has not yet split for polling purposes but it will.

I fail to see how M5s was “6 points away from an absolute majority that would allow it to govern on its own” as Eurointelligence states, but a coalition of eurosceptic parties totaling over 50%  is easily at hand.

Support for M5S (Five Star Movement) + Fi (Forza Italia) + LN (Lega Nord), all eurosceptic parties, totals 54.5%in the most recent poll.

Forza Italia is former prime minister Silvio Berlusconi’s  party.

On March 9, Bloomberg reported  Enter Berlusconi: A Man, a Ban, and His Plan to Restore the Lira.

If elections were held today, eurosceptic parties would easily hit not only a 40% threshold but a 50% threshold as well.

Whether eurosceptic could agree to form a coalition is another matter, but I suspect they would, especially if the alternative was a minority government led by PD.

New Political Turmoil In Italy After Renzi Quits As Ruling Party Leader, Triggering Re-election Battle

Two months after an unexpected, landslide loss in the December 4 constitutional referendum which cost him his job as Italy"s prime minister, on Sunday Matteo Renzi quit as leader of Italy’s ruling party, in the process triggering a re-election fight against minority dissidents that threatens the stability of the center-left government, Bloomberg reports. Renzi told a national assembly of the ruling PD that he had handed in his resignation acknowledging he was set back by defeat in last year"s referendum, one day after critics from leftist factions threaten to abandon the Democratic Party.

“Everything stems from the referendum,” Renzi told more than 600 party delegates. “I feel responsible for the defeat, there is a before and an after. That referendum was a blow for the whole country, starting with the economic system and we must now put the car back on the road.” Renzi denounced “blackmail by a minority” and infighting that he called “a gift” to the anti-establishment Five Star Movement. He is expected to stand for re-election at a congress in April or May.

As Bloomberg adds, concerns about a party split have pushed Italian bond yields higher and led to the widest spread between Italian and German 10-year bonds since February 2014. The selloff may accelerate as Renzi"s resignation could benefit Five Star, which is neck-and-neck with the party in opinion polls and wants a referendum on Italian membership of the euro area. Renzi has faced challenges to his reformist strategy and leadership especially since losing the referendum, which prompted him to resign as premier and sponsor current Prime Minister Paolo Gentiloni, a Renzi loyalist and fellow PD member, as his successor.

Renzi, who has pushed for early national elections in June or September, made no such appeal on Sunday and instead urged his audience to support Gentiloni and his government.

“Basta (enough) with discussions and polemics on the government,” Renzi said. “I ask you to applaud Gentiloni and his government because it is unthinkable that the congress be turned into a congress on the government.”

Renzi’s critics have urged him to drop pleas for early elections and pledge support for Gentiloni to remain premier until the end of the parliamentary term in early 2018. They also want more time to prepare a congress and primaries, and a more leftist program.

Meanwhile, at a meeting of party dissidents on Saturday, critics of Renzi sang “Bandiera Rossa (Red Flag)”, an iconic song of the Italian labor movement. Enrico Rossi, president of the Tuscany region, called for “a party which is on the side of the workers” and derided Renzi for “trying to present himself as the Italian Macron." Dissidents also include Roberto Speranza, a former PD chief whip in the lower house, and Michele Emiliano, president of the southern Apulia region and a possible challenger for the PD leadership.

However, a breakaway could backfire on the dissidents in making early elections more likely as it could see some 20 members of the lower house, and about a dozen senators, leave the PD and weaken the coalition government, potentially leading to further political instability in Italy.

“The Gentiloni government is our government. We back it and will continue to back it until” Italian President Sergio Mattarella decides to call elections, Matteo Orfini, PD chairman, said on the eve of Sunday’s assembly. “A split would shrink parliamentary support for the government and put it at risk.”

“We’re walking on a tightrope,” Gentiloni confided to his ministers, newspaper La Repubblica reported on Sunday.

Meanwhile, the competition between the PD and Beppe Grillo"s Five Star movement is neck and neck: an Ipsos opinion poll published in newspaper Corriere della Sera on Saturday found that Five Star would have 30.9% of the vote, against 30.1% for the PD, 13% for Forza Italia of ex-premier Silvio Berlusconi and 12.8% for the anti-immigrant Northern League. Meanwhile, a breakaway faction from the PD would have limited support with only 4.3% of voters backing a new leftist party.

Italy's Renzi Promotes Renzi-ism As Alternative To Trump-ism, Le Pen-ism, Grillo-ism

Submitted by Mike Shedlock via MishTalk.com,

Former Italian prime minister Matteo Renzi announced today that he would call a PD party congress, effectively putting his role as party leader into question.

In his speech, Renzi stated “Some people wanted a party congress to find an alternative to Renzi-ism. It needs to be done as an alternative to Trump-ism, Le Pen-ism and even Grillo-ism.”

Recall that Renzi resigned as prime minister following a landslide defeat of a referendum he sponsored. He did not have the decency to disappear, instead he called for early election with him as party leader.

Italy is in the midst of a 4th consecutive technocrat prime minister, with Paolo Gentiloni now heading the government.

Renzi has now concluded early elections in June would give an advantage to Beppe Grillo’s Five Star Movement, so he first wants a party congress to affirm his leadership. He also seeks parliamentary rule changes that would benefit him in any coalition movement.

Renzi’s Gamble

Please consider Renzi Gambles on Leadership Contest to Unite Party.

Matteo Renzi has triggered a leadership contest in his ruling centre-left Democratic party, opening up a tussle that he hopes to use as a springboard for a comeback at Italy’s next general election.

He said the party needed to unite around a platform that would confront surging populism across the world, rather than be consumed by infighting.

“Some people wanted a party congress to find an alternative to Renzi-ism. It needs to be done as an alternative to Trump-ism, Le Pen-ism and even Grillo-ism,” he said, referring to the US president, leader of the French National Front, and founder of Italy’s anti-establishment Five Star Movement.

During the party leadership battle, likely to be fought in April or May, Mr Renzi is expected to be challenged by one of a group of left-wingers who consistently criticised him for his centrist policies and domineering style during nearly three years in office.

New elections are not due until February 2018, but both Renzi and some leading opposition figures have been pushing for the national poll to be held earlier in order to clarify the will of the people.

This has raised the possibility that an Italian election could join the list of consequential elections in Europe this year, alongside the Netherlands, France and Germany. But Mr Renzi’s decision to call a leadership contest this spring means that any early Italian election would probably be pushed back to the autumn.

Rules Changes

The above article did not discuss rules changes but Eurointelligence fills in the details.

Renzi is pressing the Gentiloni government to pass the electoral reforms quickly – essentially an extension to the Senate of the new system for the chamber of deputies, minus the bits challenged by the constitutional court. Crucially, Renzi wants a majority premium not only for parties but also for coalitions. We infer from this that Renzi could be seeking a majority premium for a hypothetical alliance with Forza Italia, hoping that both parties would together surpass the 40% threshold. Renzi, however, favours everybody running individually, and then forming a coalition afterwards. In this case the majority premium would be irrelevant since no single party in Italian politics comes close to 40%.

Needless to say, there is opposition to Renzi’s plans within his own party. The mildest opposition is from the new prime minister, Paolo Gentiloni, who expressed doubts whether it would be possible to form such a coalition. He said Italy might end up like Spain last year – without a government for a long time (we think that would be that most benign of all scenarios). Another establishment politician who has already voiced his opposition to Renzi’s planned coup is Romano Prodi, still influential in Italian politics. He wants to wait until 2018, and favours Giuliano Pisapia, the former mayor of Milan.

La Repubblica recorded a negative reaction also from the Left of the PD, unsurprisingly, amid reports that Massimo D’Alema and even the fiercely loyal Pier Luigi Bersani are considering splitting away from the party.

Europeans are used to the idea that Grand Coalitions are the ultimate solution to an electoral impasse. But we find it hard to see how this could work in Italy. We are not even sure that such an alliance would necessarily have a majority. And would Berlusconi support Italy’s membership of the eurozone? He himself would be neither in government nor in parliament, as he is barred from holding office until 2018. So this raises the question of how stable such a construct would be.

Complicated Political Mess

This is a complicated mess. Berlusconi wants election in 2018 so he would be able to run. Renzi wants an election this year as does Beppe Grillo. But Renzi also wants to squash opponents of Renzi-ism first.

This may push back elections to August. Alternatively, the president may just decide to wait until 2018. A delay until 2018 is to the benefit of Berlusconi, and a delay also runs the risk of splintering PD with more infighting even if Renzi were to remain as party leader.

Given PD is the only major party that wants to stay in the Eurozone, coalition math favors Grillo.

Renzi struggles to get out of the box he is in, but it looks increasingly difficult.

Italy Increasingly Likely To Abandon The Euro

Submitted by Mike Shedlock via MishTalk.com,

An analysis of the political setup in Italy shows eurosceptics are on the verge of taking control of the country.

The only missing ingredient is an early election. And early elections are now the odds-on favorite.

Let’s back up a bit to fill in the pieces as to how things got to this point.

1. Former prime minister Matteo Renzi stepped down in December after holding a referendum that failed miserably. See Renzi Resigns Following Crushing Referendum Defeat: Beppe Grillo, Marine le Pen, Matteo Salvina Tweets


2. Italy’s president, Sergio Mattarella, appointed Paolo Gentiloni as the new prime minister after Renzi resigned. See Meet Paolo Gentiloni, 4th Consecutive Italian Technocrat Appointed Prime Minister: Renzi Not Vanquished Yet


3. The president said he would not hold new elections until differences between how the lower house of parliament assigned seats.


4. Point number three has been resolved. Both houses of Parliament are back on a proportional system.

New Elections

• New elections are possible now but the next scheduled elections are not until 2018.


• Matteo Renzi wants new elections in June. Even though he resigned, he wants back in. Renzi wants new elections this year because PD may oust him if he waits.


• Beppe Grillo wants elections as soon as possible because he believes he will win, and also because FI leader Silvio Berlusconi cannot run for prime minister until 2018 because of a tax fraud conviction.


• Berlusconi does not want early elections, but he is in the minority.

It is up to the president to call new elections, and there is pressure form at least two fronts for him to do so.

Election Polls

Chart from Opinion polling for the next Italian general election.

The situation for Renzi is actually way worse than it appears. Not only do polls tend to over-play support for PD, the party is about to splinter. Via email, Eurointelligence explains …

Whatever Happens in Italy, Grillo is Winning

Our pessimism about the political outlook for Italy was confirmed once more this morning with reports that the PD is now very likely heading for a split – the trigger being disagreement over the election date. Pier Luigi Bersani, Renzi’s predecessor as general secretary of the party, came out strongly against early election in June saying that the PD would be finished as a party if Renzi were to go ahead.

Renzi could assemble a majority in the Italian parliament in favour of a new electoral law and early elections, so this is technically doable. The question is, at what cost? Beppe Grillo’s Five Star Movement officially supports early elections, but Renzi probably has a point when he says that another year of political chaos in the PD would drive even more voters to Grillo, whose party thrives on the chaos in the country. In other words, Grillo wins both ways, and the likely design of the electoral law will also be favourable to his party. So much for the theories that there would be a technical stitch-up to keep the Five Star Movement out of power. The Italian establishment is not sufficiently united to be able to do this.

Massimo D’Alema, Renzi’s fiercest oponent within the PD, says he has done research on the potential electoral support for a party to the left of the PD which could count on 11-14% of the vote. With a weak centre-right and a fragmented left, the probability of a victory by the Five Star Movement, perhaps in alliance with other radical forces, must now be considered very high.

Wrong Five Ways

The don’t worry, it will never happen crowd said …

1. Renzi would win the referendum – Wrong


2. Renzi would not resign if he lost – Wrong


3. Renzi would gracefully step aside after he resigned – Wrong


4. PD would not splinter – Wrong


5. The other parties would pass legislation making it impossible for M5S to gain control – Wrong

That same don’t worry, it will never happen crowd also proposed

1. An alliance between Grillo and other parties won’t happen


2. If an alliance does happen, parliament will not approve a referendum on the Euro


3. If there is a referendum on the Euro, people will vote against leaving


4. It still requires a constitutional amendment

Point number 6 is in the works right now. And if such an alliance does form and win (both are highly likely in my opinion), then all that is left to stop “Italeave” is fearmongering and points 8 and 9.

Will Italy Have Early Elections: A Preview Of Today's Constitutional Court Decision

On Wednesday at around 1pm CET, the Italian Constitutional Court will unveil its ruling on changes in Italy"s electoral law, or Italicum, which was approved during Matteo Renzi’s tenure and changed the way the lower house is elected. The court began hearing challenges Tuesday to the law, the outcome of which could help determine when new elections are held. The 2015 law under review governs elections for the lower, 630-seat Chamber of Deputies. Among other things it assigns a bonus to the majority party if it reaches a 40 percent threshold.

It was adopted under the assumption that parliament"s upper Senate chamber would be reformed. Italians, however, overwhelmingly rejected the proposed Senate reforms in a Dec. 4 referendum, leading to Matteo Renzi"s resignation as premier.

Renzi"s successor, Paolo Gentiloni, is running the government until new elections can be held. Most political forces agree that a new electoral law must be passed before any vote, taking into account the constitutional court"s ruling, which is expected Wednesday.

With that in mind, here is what to watch for in tomorrow"s decision. First, some background

• Under the law, a majority of seats goes to the leading party that wins at least 40% of the vote in the first round, or wins the second round; party threshold is 3% nationally


• Senate seats remained assigned via proportional representation and without a majority bonus
  
  • Senate kept different vote thresholds for party representation: 8% regionally for parties going solo, 3% within a coalition
  
  


• Democratic Party (PD) head Matteo Renzi and his entourage are pushing for a vote in the first half of the year to exploit the party’s lead in some opinion polls
  
  • President Sergio Mattarella has called for both laws to be harmonized as “an indispensable condition” for new elections
  
  


• Renzi’s PD and Silvio Berlusconi’s Forza Italia have signaled they’re awaiting a full ruling before starting talks
  
  • Berlusconi seeks more proportionality as Forza Italia polls less than 15% in opinion surveys and wants to keep door open for grand coalition with PD
  
  
  • Renzi favors majority bonus
  
  

Scenarios

Court strikes down second round of Italicum, keeps bonus for parties with at least 40% of votes

• This is most likely scenario according to newspapers including Il Sole 24 Ore; election laws in lower house/Senate remain different; Renzi has more negotiating power in talks to make the two laws coherent; early elections still possible

Court rules both premium, second round unconstitutional

• Senate/Chamber laws remain fully proportional; parties could just agree to harmonize party thresholds; early elections possible

If the court approves new Italicum law, Renzi wins but talks for election laws are more complicated, early elections will be more difficult

• Current system could favor Five Star movement in one of the houses; any new system parties agree upon will be less friendly for Five Star, Rabobank said in Jan. 23 note

Source: Bloomberg