By Eric J. Lyman
ROME, March 7 (Xinhua) -- Italy could be headed for a clash with the European Central Bank (ECB) and Germany, the eurozone's largest economy, over the future of the country's austerity policies after Pier Luigi Bersani said he had changed course on his plan of action.
Heading into the Feb. 24-25 vote, Bersani appeared likely to maintain at least the general framework of the austerity plans put into force by Prime Minister Mario Monti.
Leading up to the vote there speculation swirled that Monti, who took over as the head of a technocrat government charged with pushing through economic reforms, might actually ally himself with a Bersani government, once it became clear his own campaign would not emerge victorious.
In a surprise, none of the candidates emerged victorious. Bersani edged three-time Prime Minister Silvio Berlusconi, a media tycoon running on a populist platform, in the popular vote and he gained control of the lower house of parliament.
But the results in the Senate resulted in a deadlock, with Bersani, Berlusconi, and comedian-turned activist Beppe Grillo, another populist, controlling large blocks of seats, but none able to cobble together a majority.
The pressure Bersani is feeling from the populist supporters of Berlusconi and Grillo is apparently making Bersani, the three-time minister, change tact.
"We must leave the cage of austerity," Bersani told his party faithful this week. "A change of course is completely necessary given that five years of austerity and repeated attacks against works have only pushed up debt levels all across Europe."
"The vicious circle of belt tightening and recession is making it impossible for governments to govern, unable to confront the immediate emergency of economic growth and unemployment," he added.
Italy's austerity policies under Monti pulled the country back from the brink of falling victim to the European debt crisis in 2011. But the moves of raising taxes, curbing tax evasion, and cutting down on government services in order to pay down debt have been difficult for most Italians, dooming Monti's own candidacy to continue as prime minster.
Experts say Bersani's acceptance of what he said in February was an "obligation" not to undo the painful gains under Monti by maintaining at least the general framework of the austerity strategy probably hurt him at the polls as well, costing him an outright victory at the polls.
"Above all, Bersani is a pragmatist and he may decide this is the path most likely to earn him the Senate majority he needs," said political scientist Eduardo Benedetti.
Once all the votes were counted and it became clear Bersani would fall short of the majority he needed in the Senate, he looked to negotiate an alliance with one of his two main rivals in order to assure a majority in both houses of parliaments, most notably to the camp of Grillo, who has repeatedly and vocally rebuffed Bersani's advances.
Some in Bersani's camp say Grillo may yet come around, perhaps just before March 15, when the new parliament is seated for the first time.
"Grillo cannot win 8 million votes by attacking the established political parties and then ally himself with one right after the elections," said Nichi Vendola, president of the southern region of Pulia and a strong Bersani ally. "But after he insists he is not interested enough to satisfy his base, I think he will at least talk."
But officially, Bersani says he will go it alone. He earned 123 seats in the Senate, and he needs at least 158 for a majority. If his new populist-sounding statements are an effort to woo new senators to his cause, it could come at the expense of support from the ECB and Germany, according to ABS Securities analyst Oliviero Fiorini and others.
"The ECB, with Germany's approval, agreed to step in to buy Italian bonds to keep the yields down, and to promise its support for the economic reforms only once Monti's austerity plans started," Fiorini said. "It is very unlikely they'd do the same if Bersani managers to take office with a populist platform."
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