Business warns about Italian impasse

The leader of Italy's main business lobby has urged squabbling politicians to form a coalition government or risk condemning the country to prolonged economic recession.
Giorgio Squinzi, head of Confindustria, said Italy was not Belgium and needed a new government, with the deadlock resulting from an inconclusive election two months ago costing the eurozone's third-largest economy about 1 per cent of output after a fall of 2.4 per cent last year.

The depth of the chaos was highlighted on Saturday when Giorgio Napolitano, the 87-year-old outgoing president, reluctantly accepted a second mandate as head of state.

Admitting that governing Italy was "not easy ... almost impossible", Mr Squinzi told the Financial Times that the latest economic data were sending worrying signals. Exports, hitherto resilient despite nearly two years of recession, are joining the overall decline.

"In this moment of political confusion, the inability to form a government, we risk going 100 days since the elections to get a new administration and this is no good," Mr Squinzi said. "I want to stress that the unknown is not whether we will hitch up with the economic recovery but even if there will be a recovery in Europe, which is quite glaringly slowing down."

Mr Napolitano's term was due to expire next month and five rounds of voting in a highly fragmented parliament failed to produce a majority to elect his successor. The centre-left Democratic party's entire leadership resigned at the weekend after an internal revolt scuppered the election bid of former prime minister Romano Prodi.
Mr Napolitano, a widely respected former communist, will lay out his plans following his inauguration on Monday. His re-election by parliament was supported by the Democrats together with Silvio Berlusconi's centre-right and a small centrist group led by caretaker prime minister Mario Monti.

Beppe Grillo, comic-activist leader of the anti-establishment Five Star Movement, condemned the backroom deal that elected Mr Napolitano as a "coup d'état" and drove to Rome in his camper van, intending to rally "millions" outside parliament. There, a few thousand demonstrators hurled abuse at the main parties on Saturday night.
On Sunday, however, Mr Grillo assured reporters he did not want to instigate violence and spoke instead of a "crafty little institutional coup" behind Mr Napolitano's re-election.

Several thousand Five Star Movement supporters marched through Rome to the Colosseum, with many chanting the name of Stefano Rodota, a leftwing academic and jurist whom the movement had backed as head of state. "We want to demonstrate democratically and peacefully," said Marino Mastrogeli, a senator, as traffic in central Rome ground to a halt.

Mr Grillo did not appear at the protest, which lasted a couple of hours and was the first of its kind since the election. "It could be dangerous for him to come now," explained Alessandro Di Battista, an MP for the movement. "We will organise better next time. Today was a spontaneous demonstration. We can't be perfect. We are new to this strange world of politics."

The movement, driven by what it calls web-based direct democracy, appears to be gearing up for an indefinite period as Italy's main opposition party.
"We are the opposition," Mr Di Battista told the FT. "After 20 years of being engaged, the Democrats and Berlusconi are getting married [in the next government[. It is incredible," he said.

With politics moving to the piazza, Italy is moving uneasily, at least for a period, from a parliamentary to a presidential system. The need to resort to an unprecedented second term for the head of state – who can dissolve parliament and nominate prime ministers – was widely seen as an indictment of the mainstream parties, weakened by the rise of Mr Grillo's movement which won a quarter of votes in February.
Mr Napolitano is expected to ask the parties that backed his candidacy to form a broad coalition, an option rejected by Pier Luigi Bersani, Democratic leader, before his humiliating resignation. The new government will be tasked with carrying out institutional and economic reform before returning to the polls, perhaps in October or early next year.

Speaking before Mr Napolitano's re-election, Mr Squinzi described the head of state as "a great president, clear-sighted and attentive to the needs of the country ... a figure that we will miss."

The stakes for Italy's established parties are high. Deeply fractured, the Democrats could fail to find a new leader capable of holding them together. Mr Berlusconi's future is threatened by his various court cases. Mr Monti is unpopular. But with Mr Grillo confident of winning the next election outright, Italy's old guard has every incentive to bury their differences.

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