22 April 2013

FT: Italy’s president warns of 'fatal deadlock'

Giorgio Napolitano, Italy's head of state elected by parliament for a second term, has delivered a powerful message to the country's political parties to end two months of "fatal deadlock" and agree on a coalition government within days.

Mr Napolitano slammed the parties for their failure to reach agreement and for the “unforgivable” lack of political reforms. He implicitly threatened to resign if no government materialised. Markets drove down Italy’s cost of borrowing while the banking sector rose strongly on the Milan bourse in a sign of confidence that Mr Napolitano would end the impasse resulting from February’s inconclusive parliamentary elections.

However, politicians warned that tough negotiations lay ahead and that a broad coalition between the centre-left and centre-right was not a done deal.

“The fact that in Italy there is a sort of widespread horror for any hypothesis of entente, alliance, mediation or convergence among different political forces, is sign of a regression”, he went on, warning of the danger of “ungovernability, at least for this legislature”. His message appeared aimed at the centre-left Democratic party which narrowly won a majority in the lower house but not in the senate, and has refused to contemplate sharing power with the centre-right led by former prime minister Silvio Berlusconi.

With the Democrats left rudderless and in disarray, it is unclear whether the party has the cohesion to support a broad coalition with Mr Berlusconi. One alternative would be for Mr Napolitano to nominate a second technocrat prime minister to replace Mr Monti, but Mr Berlusconi reiterated his demand for a seat at the table.

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