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Silvio Berlusconi has given the green light to a deal between the Five-Star Movement (M5S) and the Northern League (Lega Nord).

Why?

Berlusconi fears getting clobbered if there were new elections.

Eurointelligence Comments

Five Star and Lega have asked President Sergio Mattarella for another 24 hours so that they can agree the outlines of subsequent coalition negotiations. We think there is a good chance of a deal simply because there is no appetite among MPs of any party for another round of elections. The reason Berlusconi changed his mind is the certainty of further losses for Forza Italia if elections were to be held in July. These would have become necessary because both Lega and Five Star said they would not support a technical administration. 

There is as yet no presumption of who would be prime minister in such an alliance. There is a lot of talk of Berlusconi pulling the strings from behind the scenes. That would all be in character. The trouble is that the majority of Five Star and Lega is so strong that the usual string-pulling is not going to work the way it used to. Salvini is the new boss of the centre-right, not Berlusconi. What will be interesting to watch, however, is whether the centre-left and the centre-right will join forces if a Five-Star/Lega administration were to take office.

Antiestablishment Groups in Italy Near Deal on Governing Coalition

The Wall Street Journal reports Antiestablishment Groups in Italy Near Deal on Governing Coalition

The 5 Star Movement emerged from the March 4 vote as Italy’s largest party, scooping up 32% of the popular vote with a campaign against legacy parties. Over the last decade, the movement has grown along with frustration among Italians with one of Europe’s weakest economies and with a political class marred by corruption and nepotism.

Meanwhile, the League, born as a secessionist party in Italy’s wealthy north, has transformed into a nativist party that has taken a harsh stance against immigration, riding Italians’ frustration with waves of migration that have brought more than 750,000 migrants to Italy’s shores since 2011. It won 18% of the popular vote in March.

Both parties—which have continued to rise in the polls since the parliamentary elections—have espoused euroskeptic ideas and both have flirted with the idea of withdrawing Italy from the single currency. They also are skeptical of Italy’s membership in multilateral organizations such as the North Atlantic Treaty Organization.

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Both parties toned down their rhetoric during the electoral campaign in an effort to scoop up more moderate voters. However, Italy’s business community and international investors have expressed concern over the economic direction the country would take under a government supported by the League and 5 Star.

Election Results

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Flashback March 1

I do not believe anyone else suggested this outcome: Italy Election March 4: Consider a Surprise M5S + NL Alliance.

It remains to be seen if that is the final result, but it has a good shot. In March many thought I was crazy.

Both parties are staunchly anti-immigration and neither wants a budget that would be compliant with Eurozone rules.

M5S has softened its stance on a referendum to exit the Euro, but that may have been a political ploy to appear more mainstream.

Regardless of what happens now, Berlusconi is a has-been, finally washed up.

Lega is picking up support in the polls and M5S is holding its own.

Mike "Mish" Shedlock