Italy votes against austerity; Future of European Union uncertain
New fears that Italy's two-year recession will now spill into the rest of Europe
After three years of austerity led by Germany coupled with budget cuts aimed at saving the euro, there are signs of rebellion within the European Union. Italy's decision to elect Silvio Berlusconi is a clear rejection of Italy's rejection of spending cuts and tax increases. The future of the EU is now in doubt.
Pier Luigi Bersani moved to try to cobble a government together by wooing the upstart Grillo with tentative talk of a reformist leftist coalition. Looking weary, Bersani said it was time for the 5 Star movement to do more than just demand a clean sweep of Italy's established political order.
In response, the Italian banking sector fell seven percent in value, dragging the main MIB stock market index four percent lower.
The market turmoil in Milan spread to Germany, France and the United Kingdom, with domestic banks among the biggest fallers. Deutsche Bank saw almost five percent knocked off its value, while Barclays suffered a four percent decline. The FTSE 100 fell 1.4 percent. The German Dax slumped more than two percent and the Paris Cac was down 2.75 percent.
In contrast, Brussels and Berlin have insisted that the austerity program had to be continued in Italy. France and others seized on the outcome for their own purposes, arguing for a relaxation of spending cuts and greater emphasis on policies to boost growth and job creation.
Beppe Grillo's 5 Star movement took almost one in four of the votes with the political revival of the ex-prime minister Silvio Berlusconi. The close victor, Pier Luigi Bersani, on the center-left, claimed the mantle of the premiership.
Bersani moved to try to cobble a government together by wooing the upstart Grillo with tentative talk of a reformist leftist coalition. Looking weary, Bersani said it was time for the 5 Star movement to do more than just demand a clean sweep of Italy's established political order.
"Up to now they have been saying 'all go home.' But now they are here too. So either they go home as well, or they say what they want to do for their country and their children."
Grillo's followers in parliament would not join a coalition, but would consider proposals "law by law, reform by reform."
Bersani says that since his four-party alliance had won an outright majority in the lower house of the Italian parliament and more seats than any other grouping in the Senate, it had a responsibility to suggest ways in which Italy could be governed, despite the deadlock in the upper house.
Bersani proposed a government committed to a five-point plan for sweeping reform of Italy's political parties and institutions.
The Italian stalemate combines with tough negotiations over a bailout for Cyprus, being resisted by Germany, worries about the French economy, an unresolved debt crisis in Spain and David Cameron's decision to throw Britain's future in Europe into question, making EU politics unusually volatile.
"Italy plays a central role in successfully overcoming Europe's debt crisis," the German Foreign Minister Guido Westerwelle said.
© 2014 - Distributed by THE NEWS CONSORTIUM
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