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March 30th, 2013 
Peter Nolan
All Italy’s main daily newspapers were reporting rumours that the 87-year-old
head of state was considerin resigning on Saturday morning, in an apparently
coordinated leak that may have been a move by the president to increase
pressure on the intransigent parties to secure a deal.
Pier Luigi Bersani, the centre-left leader whose party controls the lower
house but does not have a majority in the Senate, failed to win enough
support to form a government from any of the other parties during a round of
talks this week.
He rejected demands by centre-right leader Silvio Berlusconi for a cross-party
coalition deal that would give the scandal-plagued former prime minister a
share in power and the right to decide Napolitano’s successor.
Both Mr Berlusconi’s group and the populist Five-Star Movement led by ex-comic
Beppe Grillo have also ruled out supporting a new technocrat government like
the one led by outgoing Prime Minister Mario Monti, blocking what appears to
be the only other option.
With investors mindful of the 2011 debt crisis that brought down Mr
Berlusconi’s last government, the gridlock has fed worries about Italy’s
ability to confront a prolonged economic crisis that has fuelled growing
disillusion with the political class.
The country has been in deep recession for more than a year, with record
unemployment, especially among the young and a 2-trillion-euro public debt
that is dangerously exposed to swings on international bond markets.
Rumours have been circulating for days that ratings agency Moody’s is
preparing to cut its rating on Italy’s sovereign debt, which is already only
two notches above “junk” grade, partly due to the uncertain
political outlook.
With bond markets closed for the Easter break, investors have been left on the
sidelines but a poorly received auction of mid and long term debt last week
underlined the danger if the crisis drags on.
Opinion polls issued in the past few days have suggested that Mr Berlusconi
could continue the strong surge that enabled him to close a substantial gap
with the centre-left in the final days of the election campaign in February.
A poll by the SWG company on Friday showed his centre-right alliance with the
Northern League in first place with 32.5 percent of the vote, ahead of the
centre-left on 29.6 percent and Mr Grillo’s Five-Star Movement on 24.8
percent.
The polls could encourage Mr Berlusconi to gamble on a quick new election,
although unless a deeply flawed electoral law is repealed before the vote,
it could produce another damaging stalemate.
With Agence France-Presse and Reuters
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