Italy: Centre-left coalition leads polls but final outcome still too close to call
February 5, 2013
A few weeks ahead of the 24-25 February general election, the final outcome of the vote is still difficult to predict. The complexity of the Italian electoral system - with two different laws for electing members of the lower and the upper house - combined with the various electoral alliances currently at play raises the chances of a hung parliament and adds further uncertainty to the post-election scenario. According to political analysts, the result will ultimately be shaped by the main parties' performance in four key regions - Lombardy, Veneto, Campania and Sicily.
Currently leading the polls is the Italy Common Good (IBC) coalition, an electoral alliance between the centre-left Democratic Party (PD), the more leftist Left, Ecology and Freedom (SEL) and other minor centre-left forces. The coalition Prime Minister's candidate is Pierluigi Bersani, secretary of the Democratic Party and former Minister of Industry. The centre-left coalition pledges continuity with the reforms initiated by the technocratic Monti administration at the end of 2011. However, some of the coalition members believe that the current austerity policies should be somewhat softened, for instance by lightening the impact on low-earners of recent tax increases and compensating for the lost revenue by raising a one-off wealth-tax.
Following in the polls is the centre-right coalition, whose main constituents are Silvio Berlusconi's People of Freedom (PDL) and the regionalist Northern League (LN), led by Roberto Maroni. The PDL, which had largely lost its support among the general public following Berlusconi's resignation as prime minister in late 2011, has made an impressive comeback in recent weeks, following various media appearances by its leader.
Finally, after weeks of speculation and intense political manoeuvring, at the end of December, incumbent Prime Minister Mario Monti finally announced his intention to run for re-election. Monti is heading a coalition of centrist parties, under the name With Monti for Italy. While Monti enjoys strong support within the country's business establishment, the raft of austerity measures implemented since his nomination as prime minister has lost him support among the general public. Against this backdrop, Monti has repeatedly pledged to put a stronger focus on boosting growth in his second term, promising to cut taxes both for corporations and workers, as well as for home owners. According to most recent surveys, Monti's coalition trails in the polls as the third force behind the centre-left and the centre-right, but its role might prove decisive in case either of the two main coalitions does not win a sufficient majority to form a government.
According to political analysts, the most likely outcome of the elections is a post-electoral pact between the centre-left parties and the centrist coalition led by Mario Monti. That said, a recent banking scandal involving Banca Monte dei Paschi dei Siena (MPS), Italy's third largest lender, may have a strong negative impact on the results of the centre-left, due to the ties between Bersani's PD and the Tuscan lender.
Following allegations in the press and a subsequent internal inquiry, the bank was forced to admit losses of up to EUR 720 million on two derivative trades undertaken by the previous bank's administration in 2009, of which the current management were unaware. The executives who signed the contracts are currently under investigation for accounting malpractice related to those derivative deals. In addition, prosecutors are also investigating allegations of corruption related to the acquisition by MPS of Antonveneta, a local entity which the Tuscan bank bought at an inflated price.
In order to shore up its ailing capital position, the bank's shareholders agreed in an extraordinary meeting to tap a government bailout loan of EUR 3.9 billion. The Monte dei Paschi affair casts a shadow on the supervisory role of the Bank of Italy, as the institution appears to have been aware of the derivative trades since 2010. In addition, the scandal calls into question the entire role of politics in the Italian banking system and, in particular, of the Democratic Party, as Siena has always been the party's stronghold. In fact, the centre-left has historically ruled the town council, which in turn controlled the charitable foundation that constitutes Monte dei Paschi's main shareholder.
Author: Armando Ciccarelli, Head of Data Solutions