02/26/2013 11:18 am ET Updated Apr 28, 2013

Italy's Political Earthquake, a Major Warning for Europe

More than once, Italy's trends have prefigured larger European dynamics, for the best, the Renaissance, but also for the worst, Mussolini's fascism, and, by putting a finger on the Italian peninsula one often feels the pulse of a continent.

The outcome of the election which determined the composition of the 17th Parliament of the Italian Republic reveals a profoundly fragmented country which, in the midst of a world of changes, questions the European Union's orientations.

In the most recent elections in Catalonia but also in the Netherlands, despite nationalistic temptations, the majority considered that their Union has become the necessary instrument to maintain the political relevance of the Old continent. However, anti-European sentiment dominated the vote in Italy, a founding member of the European Community, the country of European patriots like De Gasperi, Ciampi or Romano Prodi.

The Europhile Pier Luigi Bersani was unable to reach an indisputable lead while the incumbent Prime Minister and former European Union's official Mario Monti underperformed. By contrast, the Eurosceptic forces showed vitality, not only Italy gave another life to Silvio Berlusconi's demagoguery but she even applauded Beppe Grillo's populistic circus.

This is a worrisome moment for Italy and sad news for the continent: showmanship attracted more than soberness, parochial entertainment more than European commitment. However, Italy and the European Union -- not a sum of national egoisms -- have the resources to face a crisis which will have far reaching consequences.

With the 3rd economy of the euro area, the 8th GDP in the world -- slightly larger than Russia last year -- Italy, a member of the G8 and a cultural superpower, remains a significant player in world affairs.

Obviously, the next Italian government will face daunting domestic challenges: the country's public debt stands at 126 percent of its GDP, the economic output is now 7 percent below its 2007 pre-crisis level, the unemployment rate is high -- 37 percent youth unemployment -- and a socio-economic gap between the North and the South divides a country whose centrifugal forces have always been a threat to unity. However, investors, media and chancelleries should not underestimate Italy's strengths: many of the medium-sized, family-run Italian companies are genuine poles of excellence with largely positive balance sheets, the brand "Italia" is a universal magnet and, last year, the country realized a €8.8 billion trade surplus.

Italy and Europe share a common destiny, the continent cannot thrive with a languid "Boot" and vice versa. It is time to push for a different economic policy at the European level, to put the euro area on the path of economic growth.

Facing the election of the Bundestag in September, the German Chancellor Angela Merkel will not immediately back initiatives which could ignite substantial economic activities, but with its € 188bn trade surplus she must be aware that Berlin has the key to Europe's recovery, the condition for enduring German prosperity.

In their quest for growth and jobs, the leaders of Europe have just received a strong support from Washington D.C. with the announcement by President Barack Obama of a negotiation on a Free Trade Agreement (FTA) between the world's two largest economies - the European Union and the United States of America. Such a FTA would boost GDP on both sides of the Atlantic by up to 2% and create 2 million jobs.

While the new Italian leader will have many cards in his hands -- domestic, European, transatlantic -- he will have also to make a wise use of the new international configuration to maximize the Italian merchants' traditional ability to trade with every corner of the world. If, confronted with the profoundly disturbing outcome of the elections, a sensible reaction re-energizes the country and the continent around noble purposes -- the solidarity among the people of Europe and the rank of Europe in the 21st century -- Italy's tragicomedy can still culminate in a happy ending.

David Gosset is director of the Academia Sinica Europaea at China Europe International Business School (CEIBS), Shanghai, Beijing & Accra, and founder of the Euro-China Forum.