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Italy parliament elects speakers as tensions continue

Piero Grasso (C) is congratulated after the vote electing him as the new Senate president at the Senate in Rome March 16, 2013. REUTERS/Remo
Piero Grasso (C) is congratulated after the vote electing him as the new Senate president at the Senate in Rome March 16, 2013. REUTERS/Remo

By James Mackenzie and Roberto Landucci

ROME (Reuters) - Italy's center-left alliance scraped a narrow victory in a vote to appoint the new speakers of parliament on Saturday but the fragile margin of success underlined how hard it will be to form a stable government after last month's deadlocked election.

The appointment of the speakers was parliament's first act since the February election, in which the center-left formation of Pier Luigi Bersani won a lower house majority but not enough to control the Senate and form a government.

The result has left Italy stuck in a political quagmire, arousing fears that bond markets could take fright, reigniting the euro zone crisis and endangering the government's ability to manage Italy's 2-trillion-euro public debt.

After a tense day in parliament, the center-left candidates Laura Boldrini and Piero Grasso, a former anti-mafia magistrate, were elected as speakers of the lower house and Senate after other parties ruled out accepting the posts in exchange for supporting a Bersani-led government.

With no clear majority in the Senate, Democratic Party (PD) leader Bersani had to rely on abstentions and a handful of votes from other groups, including Beppe Grillo's anti-establishment 5-Star Movement and centrists led by Prime Minister Mario Monti. Grasso still did not get an absolute majority in the upper house.

Although the center-left now has the influential speakers' chairs, the result highlighted Bersani's failure to secure a wider accord that might have allowed him to form a government. It did little to quell speculation that Italy may have to return to the polls within months.

"We know that Bersani and the PD cannot form a government," Maurizio Gasparri, a close ally of former prime minister Silvio Berlusconi said after the vote.

Mindful of the threat of instability, President Giorgio Napolitano issued a statement saying Monti would remain in office until a new government was formed because of the need for authoritative leadership in Europe and on the economy.

BLOCKED NEGOTIATIONS

It is now up to Napolitano to try to find a way out of an impasse that recalls the short-lived governments of the postwar era. He will begin sounding out party leaders on Wednesday to see if any of them can form a workable majority.

His own term ends on May 15 and one of the major tasks facing parliament is to elect a successor, a process that will begin in mid-April and which could see Bersani try to reach a deal with Monti's centrists.

Bersani has rejected any alliance with Berlusconi, who was whistled and booed by a few dozen protestors as he arrived for the vote on Saturday, but the fiery Grillo has repeatedly rebuffed Bersani's offers to cooperate.

The fact that a handful of 5-Star Senators appeared to have backed the center-left on Saturday could point to divisions already appearing in the new movement.

There are also cracks within the PD itself, where Bersani's position has come under growing threat from supporters of the young mayor of Florence, Matteo Renzi.

The stalemate is being watched across Europe with growing alarm at the prospect of prolonged instability and a halt to reforms started by Monti to try to revive an economy deep in recession and with record unemployment.

In an interview with a German magazine on Saturday, the influential head of the Bundesbank, Jens Weidmann said that Italy could not count on support from the European Central Bank if it turned its back on reforms.

Italy's borrowing costs have come down sharply since the height of the 2011 crisis following an ECB pledge of support for countries in difficulty, but warnings have been growing that the calm may not last.

An opinion poll on Friday showed rising support for Grillo, who wants a referendum on the euro and who said in an interview this week that Italy was "already out of the euro."

It showed Grillo's support at 30 percent, compared with the 25.5 percent he got in the election, ahead of both Bersani's center-left Democratic Party (PD) on 25.1 percent and Berlusconi's People of Freedom (PDL) party on 23.3 percent.

Berlusconi's position has been made more difficult by trials on charges of tax fraud and paying for sex with a minor as well as an investigation into allegations he bribed a former Senator in 2006. His supporters say the trials are politically motivated.

On Saturday, judges ruled that a hearing in the tax fraud trial related to Berlusconi's Mediaset broadcasting empire could be delayed until March 23 due to the eye problems that kept the 76-year-old media magnate in hospital all week.

(Additional reporting by Giselda Vagnoni and Paolo Biondi; Editing by Matthew Tostevin)

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