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Italy's populist parties could form a government that leaves Berlusconi out in the cold

  • Italy's two populist parties have shown they can find common ground in the first test of a possible political alliance.
  • But experts believe a coalition government formed of Lega (League) and the Five Star Movement (M5S) would ultimately have a "short shelf life."
  • The two parties' leaders managed to come together Friday to reach a deal to elect the speakers to the Senate and lower house.
Silvio Berlusconi, Italy's former prime minister, speaks with colleagues during a parliamentary session inside the Senate
Silvio Berlusconi, Italy's former prime minister, speaks with colleagues during a parliamentary session inside the Senate

Italy's two populist parties have shown they can find common ground in the first test of a possible political alliance, but experts believe a coalition government formed of Lega (League) and the Five Star Movement (M5S) would ultimately have a "short shelf life."

The two parties' leaders managed to come together Friday to reach a deal to elect the speakers of both the upper (the Senate) and lower houses (the Chamber of Deputies) of parliament.

Luigi Di Maio, the anti-establishment M5S party leader, put forward Roberto Fico to be elected as speaker of the lower house. And in return for its support for Fico, the center-right coalition led by Lega (the biggest party in the alliance), former Prime Minister Silvio Berlusconi's Forza Italia and Fratelli d'Italia (and the smaller Noi con L'Italia) got their choice of Maria Elisabetta Alberti Casellati - a member of Forza Italia and confidante of Berlusconi - elected as Senate speaker.

Italy held a general election on March 4 but no one party or coalition gained enough of the vote to govern alone. M5S was the single largest party, with 32 percent of the vote, but the center-right coalition got 37 percent, meaning that a period of intense negotiation is due to start to see if a coalition government can be formed.

The election shocked Europe as M5S and Lega, which both ran on an anti-establishment, populist message, performed well while the former ruling Democratic Party did badly.

M5S and center-right coalition?

While political analysts saw the deal over the election of speakers (which could have been a more fraught and drawn-out process) as "audacious" and as a sign of potential cooperation for a coalition, they didn't expect the "entente" to last long.

"Is the agreement between M5S and NL (Lega, which was formerly known as Lega Nord) a prelude to a government coalition between these two forces, or even a broader coalition center-right-M5S?" J.P. Morgan economist Marco Protopapa asked.

"In our view, the latter remains unlikely given the evident hostility towards Berlusconi of a large part of M5S MPs (and arguably an even larger part of M5S electors)," he said in a note Monday.

"Perhaps, it could become a viable option only in the — very unlikely — case that Berlusconi were to take a step back from the leadership of Forza Italia (as, allegedly, asked by Salvini)," he said.

M5S-Lega coalition?

Protopapa said that while J.P. Morgan recognized that "the relationship between the senior leaders of M5S and Lega has been fairly cooperative, with declarations of mutual appreciation" there were constraining factors that could prevent a "populist coalition" of Lega and M5S.

"However, we note that (i) Salvini is pretty much acting as the leader of the whole center-right, and (ii) the significant constraints we discussed remain intact," he said, listing the sticking points as M5S' dominance versus Lega, some hostility across the respective electorates and ideological differences, among other risk factors.

"In our view, a non-mainstream government M5S-NL could hardly be a proper political government," he added. Rather, if anything, it would be a temporary solution to make sure the country goes to a new election at the earliest possible date after the summer, he believed.

More noise to come

Meanwhile, Wolfango Piccoli, co-president of political risk consultancy Teneo Intelligence, said Monday that a populist coalition of Lega and M5S would likely have a "short shelf life."

"A governing M5S-League alliance is one of the options on the table but making it happen is hard and risky," Piccoli said, adding that a possible M5S-Lega government would "have a narrow agenda"

"Both Di Maio and Salvini would likely have to give up their aspirations to become the next prime minister and settle on a compromise figure. Both leaders could also face a backlash from their own members and voters," Piccoli said.

"This is particularly the case for Salvini, who would have to break away from the center-right alliance and make his own (Lega party) the junior partner of the M5S — a notoriously unpredictable and nebulous entity with no previous experience in government."

A safer option for Salvini would be to seek Forza Italia's involvement in a possible arrangement with the M5S. However, this is even more problematic to achieve given the intense mutual hostility between Berlusconi and the M5S, Piccoli noted.

With the speakers' election out of the way, Italy's President Sergio Mattarella — who is in charge of overseeing the formation of a government — will soon start consultations with party leaders designed to find compromises and break the political deadlock.

As such, analysts expect more noise in April with Piccoli warning that "the lack of visibility on the future government is likely to persist for weeks, if not longer."