Scott Botterman
PIIGS

Mechanics of an Italian Election

By, 02/22/2013

Italians head to the polls this weekend (February 23 and 24) for Parliamentary elections after technocratic Prime Minister Mario Monti’s reform- and austerity-driven government collapsed in December. While there was considerable national-level polling conducted before the February 8 public opinion poll blackout, the polls wouldn’t perfectly translate to the final outcome because Italy’s upper and lower houses are decided by two different voting styles.

Here’s a quick tutorial on the mechanics of Italian elections.

Chamber of Deputies (Lower House):

The electoral system for the Chamber of Deputies, Italy’s lower house of Parliament, is based on party-lists representation. To be represented, a coalition must garner 10% of the popular vote, 4% for an individual party and 2% for a party in a coalition. Hence, smaller parties often band together or form coalitions with larger parties to lower the minimum threshold they must exceed.

The party or coalition winning a plurality is automatically awarded a majority in the lower house (roughly 54% of the seats), guaranteeing a working majority. Seat-holders are selected based on a preference list created by the party. For example, should a party win 25 seats, the 25 top-ranked candidates within that party (again, based purely on preference) “win.”

On February 8 (before the polling blackout), the last official poll showed Pier Luigi Bersani’s center-left coalition was the frontrunner with 37.2% of the vote. Former Prime Minister (and seemingly indestructible) Silvio Berlusconi’s center-right coalition had closed the gap on Bersani by appealing to the far right, polling at 28.3% (and recent “unofficial” polls indicate he has closed it further). But many Italians remain hesitant to support a candidate bogged down in myriad legal problems, infamous for risqué parties and noted for passing legislation that protects him and his empire. Monti’s centrist coalition (polling at 14.8%) and activist-comedian Beppe Grillo’s anti-establishment Five Star Movement (polling at 15.9%) will likely not have an impact in the Chamber of Deputies

The frontrunner, Bersani, has a decent track record as a reformist, supports the eurozone and says he’d continue focusing on reducing Italy’s deficit. However, he’s also indicated he would like to roll back some of Monti’s reforms, including important measures targeting Italy’s uncompetitive labor market. Should this prove to be more than campaign rhetoric, it could be a stumbling block to Italy’s needed economic reforms.

Senate (Upper House):

The Senate’s electoral process is similar to the lower house’s, but on a regional basis. The amount of Senate seats coming from each region is determined by the region’s population.

If a party wins a plurality within a region, they win the majority of that region’s senate seats. The thresholds for winning seats are also based at a regional level (20% minimum for a coalition, 8% minimum for a party, and 3% minimum for a party in a coalition). Of the 20 regions, the 5 most populated are Lombardy (Milan), Campania (Naples), Lazio (Rome), Sicily and Veneto (Venice). Combined, they account for over half of Italy’s population—making winning those regions key to a Senate majority.

Final regional polls show Bersani’s center-left coalition also positioned to win a majority in the Senate. However, the races in Lombardy, Campania and Sicily are close and could slip away from him, leaving Bersani with a minority in the Senate. The result would be an unstable government (fairly common in Italy)—a further detriment to continued progress on reforms. A fresh round of elections might also be necessary, but this risk is somewhat mitigated by Bersani’s ability to ask Monti’s centrist coalition to join him in forming a larger coalition.

With a large portion of voters remaining undecided and a low voter turnout expected, Italian election results could further shift away from the polls. Whatever the results, Italy’s new leadership is unlikely to preside over an Italian exit from the eurozone (as some have feared). Though Italy’s economy has struggled over the last few years, most Italians still prefer eurozone membership and are aware an exit would do much more harm than good at this stage.  The re-introduction of the lira would likely significantly detract from Italian purchasing power internationally. And though austerity and reforms have been unpopular, Italy’s fiscal position is much better now than it was in 2011 under Berlusconi’s government.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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