Italy's political crisis deepens, Grillo refuses to support government

Wed Feb 27, 2013 4:05pm EST
 

By Barry Moody

ROME (Reuters) - An Italian political crisis that has rattled the euro zone deepened on Wednesday when two party leaders ruled out the most likely options to form a government and avoid a new election.

Populist leader Beppe Grillo slammed the door on overtures from center-left boss Pier Luigi Bersani with a stream of insults while Nichi Vendola, Bersani's junior coalition partner, ruled out a government alliance with the center-right.

These two options are currently seen as the only way to avoid returning to the polls in short order after the February 24-25 election, in which a huge protest vote against traditional politicians and austerity policies plunged Italy into deadlock.

The prospect of prolonged uncertainty in the euro zone's third-largest economy caused sharp falls on world markets immediately following the election result, but they calmed on Wednesday after solid demand for Italian government debt at an auction, with European bonds, shares and the euro all boosted.

The center-left took the most seats in the poll but no single group has a big enough majority to rule.

Grillo's anti-establishment 5-Star Movement blocked center-left control of parliament after one of the biggest populist victories in recent European history.

Bersani put out cautious feelers to Grillo on Tuesday, suggesting there could be agreement on a short list of measures common to both sides.

But he said those supporting a center-left government would have to back it in a confidence vote, which would be essential before it could be installed.   Continued...

 
Italian PD (Democratic Party) leader Pier Luigi Bersani leaves at the end of a news conference in Rome February 26, 2013. Italy's stunned political parties looked for a way forward on Tuesday after an election that gave none of them a parliamentary majority, posing the threat of prolonged instability and European financial crisis. The results, notably by the dramatic surge of the anti-establishment 5-Star Movement of comic Beppe Grillo, left the centre-left bloc with a majority in the lower house but without the numbers to control the powerful upper chamber, the Senate. REUTERS/Tony Gentile