Italy is holding a pivotal election today that will not only decide who controls their new government, but how the country will continue to deal with economic crisis at home and across Europe. And depending on which way the results swing, Rome could end up even more divided than Washington.
The election, which was began as a contest between four popular candidates, has become a showdown between two major factions—the "center-left" Democratic Party led by Pier Luigi Bersani, and the "center-right" coalition of former Prime Minister Silvio Berlusconi. The Five Star Movement, a new party formed by comedian-turned-activist Beppe Grillo, is unlikely to win enough votes for a majority, but has had surprisingly strong showing for a third party that didn't even exist five years ago.
Running a distant fourth is the party of Mario Monti, the current Prime Minister. Berlusconi was forced to resign in 2011, not because he ran Italy's economy into the ground during the European debt crisis but because he was involved in a sex scandal with underage prostitutes. Monti, a technocrat economist, has spent the last year or so at PM trying to undo the economic damage created by years of skyrocketing government debt. He's had some success bringing Italy back from the brink of disaster, but that has meant painful austerity measures, which included tax increases and unwelcome pension reforms.
The improving global economy has helped stabilize things somewhat, so once Berlusconi decided to enter the race, his party withdrew its support for Monti, essentially casting him out of the race. He's a distant fourth in all the exit polls.
Early exit polls today saw Bersani's coalition way ahead, making it look as though he was going to coast to the presidency. That would be the preferred outcome for most economics watchers since Bersani was be expected to continue down the path Monti started, and would work well with the other leaders of the European Union and European Central Bank.
However, a second round of exit polls showed Berulusconi's party taking the lead in the Senate. If that happens, there's likely to be complete chaos in Rome for a while. Imagine our own divided Congress, only with each house even more divided because there are more than two parties, and with partnerships formed to create a working government that are even more fragile than anything involving the Tea Party.
Even worse, Berlusconi's biggest campaign promise was to undo a huge tax instituted on homeowners by Monti's government. It's very popular with voters (who doesn't love a tax cut?), but would probably be disastrous for the Italian government, which can't afford such a huge giveaway right now.
At the moment, the race is stuck in the proverbial "too close to call" stage. (An official with Bersani's Democratic Party is even predicting a second run-off election ) We may not know until even tomorrow who is truly in charge, but the fact the Berlusconi—despite his numerous scandals and questionable track record—is still in the running is a remarkable feat in itself. We'll keep you updated if and when more concrete result come in.