Jerusalem warily eyeing Italian election results

Israel cast a wary eye toward Italy on Tuesday as a political deadlock emerged from its stunning election, where a comedian’s protest party led the poll and no group secured a clear majority. The Italian stock market fell and state borrowing costs rose as the election results threw the country into shock and instability.

“The winner is: Ingovernability” ran the headline in Rome newspaper Il Messaggero, reflecting the stalemate the country would have to confront in the next few weeks as sworn enemies would be forced to work together to form a government.

In a sign of where that might lead, former prime minister Silvio Berlusconi indicated his Center-Right might be open to a grand coalition with the Center-Left bloc of Pier Luigi Bersani, which will have a majority in the lower house thanks to a premium of seats given to the largest bloc in the chamber.

Results in the upper house, the Senate, where seats are awarded on a region-by-region basis, indicated the Center-Left would end up with about 119 seats, compared with 117 for the Center-Right. But 158 are needed for a majority to govern.

Any coalition administration that may be formed must have a working majority in both houses in order to pass legislation.

Comedian Beppe Grillo’s anti-establishment 5-Star Movement won the most votes of any single party, taking 25 percent. He shows no immediate inclination to cooperate with other groups.

Despite talk of a new election, the main established parties seem likely to try to avoid that, fearing even more humiliation.

Israeli officials, meanwhile, said that Italian political and economic uncertainty does not serve Israel’s better interests.

An Italy that is weak because of political and economic problems is not an Italy that could stand up for Israel – and by so doing buck the wishes of the more powerful EU countries – inside EU institutions, as Rome has done on certain occasions over the past decade.

While Berlusconi is considered a strong ally of Israel’s, his friendship is seen by some as a liability because he has alienated so many in Europe.

“He is completely discredited in Europe,” one official said. He added that it does not necessarily help if Berlusconi goes to bat for a country, because then other countries will ask themselves if they want to make common cause with the controversial Italian politician. “His support can be a boomerang,” he said.

In addition, amid Italy’s political and economic chaos, there may be calls for pulling Italian troops out of UNIFIL in Lebanon, something Jerusalem does not want to see happen, the official said.

Bersani is viewed as friendly, though some officials in Jerusalem are concerned about his history in the Italian communist party, as well as the possibility that he may pick Massimo d’Alema, a man who has served as Italy’s prime minister and foreign minister in the past, and is viewed by some in Israel as having a pro-Palestinian tilt.

The officials are most concerned, however, about the impact of Grillo and his party. Grillo, one official said, is against everything: the Left, the Center, the Right, politicians, the EU, America and – of course – Israel. The good news, he said, is that he seems to want to concentrate more on domestic issues than foreign affairs.

World financial markets, meanwhile, reacted nervously to the prospect of a stalemate in the euro zone’s third-largest economy, with memories still fresh of the crisis that took the 17-member currency bloc to the brink of collapse in 2011.

In a clear sign of worry at the top over what effect the elections could have on the economy, Prime Minister Mario Monti, whose austerity policies were repudiated by voters, called a meeting with the governor of the central bank, the economy minister and the European affairs minister for later on Tuesday.

Other governments in the euro zone sounded uneasy. Allies of German Chancellor Angela Merkel made no secret of disappointment at Monti’s debacle and urged Rome to continue with economic reforms Berlin sees as vital to stabilizing the common currency.

France’s Socialist finance minister also expressed “worry” at the prospect of legislative deadlock in Italy, but said that Italians had rejected austerity and hoped Bersani’s Center-Left could form a stable government to help foster growth in Europe.

Berlusconi, a media magnate whose campaigning all but wiped out Bersani’s once commanding opinion poll lead, hinted in a telephone call to a morning television show that he would be open to a deal with the Center-Left – but not with Monti, the technocrat summoned to replace him in a crisis 15 months ago.

“Italy must be governed,” Berlusconi said, adding that he “must reflect” on a possible deal with the Center-Left. “Everyone must be prepared to make sacrifices,” he said of the groups which now have a share of the legislature.

The poor showing by Monti’s centrist bloc reflected a weariness with austerity that was exploited by both Berlusconi and Grillo; only with the help of Center-Left allies did Bersani beat 5-Star, by just 125,000 votes, to control the lower house.

The worries immediately went beyond Italy’s borders.

“What is crucial now is that a stable functioning government can be built as swiftly as possible,” said German Foreign Minister Guido Westerwelle. “This is not only in the interests of Italy but in the interests of all Europe.”

The euro skidded to an almost seven-week low against the dollar in Asia on fears about the euro zone’s debt crisis. It fell as far as $1.3042, its lowest since January 10.

Commentators said all of Grillo’s adversaries underestimated the appeal of a grassroots movement that called itself a “nonparty,” particularly its allure among young Italians who find themselves without permanent full-time jobs and the prospect of a decent future.

The 5-star Movement’s score of 25.5% in the lower house was just ahead of the 25.4% for Bersani’s Democratic Party, which ran in a coalition with the leftist SEL party, and it won almost 8.7 million votes overall – more than any other single party.

“The ‘non-party’ has become the largest party in the country,” said Massimo Giannini, commentator for Rome newspaper La Repubblica, of Grillo, who mixes fierce attacks on corruption with policies ranging from clean energy to free Internet.

Grillo’s surge in the final weeks of the campaign threw the race open, with hundreds of thousands turning up at his rallies to hear him lay into targets ranging from corrupt politicians and bankers to Merkel.

In just three years, his 5-Star Movement, heavily backed by a frustrated generation of young Italians, has grown from a marginal group to one of the most talked about political forces in Europe.

A long recession and growing disillusionment with mainstream parties fed a bitter public mood that saw more than half of Italian voters back parties that rejected the austerity policies pursued by Monti with the backing of Italy’s European partners.

Berlusconi’s campaign, mixing sweeping tax cut pledges with relentless attacks on Monti and Merkel, echoed many of the themes pushed by Grillo and underlined the increasingly angry mood of the Italian electorate.