Italy's Election: Uncertainty Wins

02/26/2013 01:15 pm ET | Updated Apr 28, 2013

Italy's convoluted electoral outcome marks a period of protracted economic instability and political fragmentation. The electoral impasse may result in a short-lived grand coalition government focused on a narrow legislative agenda with new elections before year's end. However, any such government will struggle to muddle through and achieve consensus on the lowest common denominator. The stakes for Italy, Europe and the broader global economy are now higher than ever. Looming ever large is the lingering eurozone crisis which can unleash havoc at any given moment

With or without former Prime Minister Mario Monti, any new government will largely have to follow the general path set by his technocratic government. It can alter pace but not approach. It can engage in rhetorical gymnastics and political window-dressing to allay public fears and frustrations. However, ultimately it has little room to maneuver. Attempting alternatives will only delay the inevitable. Reform ultra-lite will simply not suffice.

The electoral deadlock marks another sad chapter in Italy's unfolding political tragedy and its quirky cast of characters. They include the center-left's dumbfounded Pier Luigi Bersani; the center-right's comeback spoiler, Silvio Berlusconi; the comedian upstart, Beppe Grillo; the accidental politician, Mario Monti; and ever-present uncertainty.

As the chief protagonist of the Italian tragedy, uncertainty effectively fills the void left by Italy's bankrupt political class. Furthermore, it complicates the tackling of serious reform and provides a lifeline to entrenched vested interests. Above all, it will determine the next act of the Italian tragedy: another election in the not-too-distant future.

After weeks of leading in polls, the electoral paralysis amounts to a defeat for Mr. Bersani and leftist allies. Any emerging sense of historical momentum has evaporated. After all, they do not represent change but just a recycled agenda. Bersani is a career politician with no private sector experience. As a party apparatchik, he spent his life climbing ranks. His talents lie more in persistence and survival skills and less in political acumen. Even with Berlusconi at his most vulnerable, Bersani and acolytes failed to deliver a fatal blow or defeat him convincingly.

As leader of the coalition with technically the most votes, Bersani possesses no popular mandate. In fact, his greatest challenge comes from within his own partisan ranks, particularly from the CGIL. As Italy's largest trade union, it has over 5 million members, half of which are pensioners.

Not only did the election produce no single figure or party with a mandate, a convoluted electoral system deliberately complicates one from emerging. Without electoral reform on the agenda, further gridlock can be expected. However, a closer look at the ballots reveals that Italy largely remains a center-right country.

Although Silvio Berlusconi defied expectations through a surprising comeback, Italy's center-right lacks a long-term viable party and credible leadership. An effective realignment of Italy's center-right is required. While Berlusconi remains its key obstacle, he is still the center-right's chief vote-grabber. Presently, there is no convincing replacement in sight. One will struggle to emerge without Berlusconi's personal blessing. Even with it, one risks relegation to Berlusconi's shadow. His endorsement will prove a double-edged sword.

Over the years, Berlusconi had an historic opportunity to transform Italy and failed due more to self-interest than lack of talent. However, the current electoral stalemate reaffirms his role at the center of Italian politics. Without any serious alternatives, he remains the main draw for loyal center-right voters.

Beppe Grillo's Five Star Movement has most to celebrate. Overall, it achieved third place behind the center-left and right coalitions but can technically boast the most votes of any individual party. Despite lacking a coherent agenda, his populist rhetoric and appeal most effectively expressed public frustration and grievances with the status quo and he skillfully translated it into votes. His numbers were further bolstered by fallout from major scandals of recent weeks. For now, Grillo enjoys the benefits of popular support without assuming the responsibilities of governing. Secure in his bully pulpit without fear of public backlash, Grillo is in pole position for Italy's next election.

Mario Monti's fourth place finish with roughly 10 percent of the vote comes as no surprise. However, blaming him for Italy's ills is misguided. After all, he was a captain with no ship, more comfortable in the halls of academia and Brussels than in Rome. He was the accidental politician drawn into government as interim prime minister due to others' shortcomings and with the full support of the major parties. His mandate was not to provide a panacea for Italy's troubles.

Monti's technocratic government had a specific mission: pulling Italy from the brink, restoring its credibility internationally, and placing it on a path to reform before the 2013 election. By buying precious time and providing a modicum of stability and respite from turbulence, Monti's government largely achieved its task. All along, it was the responsibility of successor governments to continue and implement real reform. The muddled electoral outcome threatens to undo whatever basic progress was achieved.

Monti should not be written off in light of current gridlock. He still has an important role to play. After all, he remains one of very few officials with international credibility to deal with Italy's partners in Europe and beyond.

After the Tangentopoli, or Bribesville, scandals of the 1990s brought down Italy's post-war political order, the start of a second republic was hailed by many. Although the players may have changed, the overall practices did not. Any current talk of a new era, or incoming third republic, will prove even more elusive. Unless accompanied by an overall transformation across Italy's political spectrum and broader civil society, greater troubles lie ahead. Without internally driven reform, external pressures may impose change upon Italy by necessity and more ruthlessly.