Recent polls for Italian politicians supporting the eurozone and EU have collapsed.

Pro-Europe polls are highly likely to get worse as a  further splintering of Matteo Renzi’s PD party takes place.

It is not out of question for Beppe Grillo’s eurosceptic Five Star Movement (M5S) party to achieve an absolute majority in the next election. However, please note that 40% is the threshold for a “majority”.

The Financial Times reports Italy is Falling Out of Love with Europe.

Foreigners often underestimate Italy’s ability to sidestep calamity. That said, the stakes are higher now than in 1992. Solutions may prove harder to find. The reason lies in the radically different EU and Mediterranean contexts in which Italy finds itself.

Some of contemporary Italy’s challenges appear similar to those of the early 1990s. The party system is once again in fragments. The ruling centre-left Democratic party (PD) split last month. The right is divided. The most popular opposition party is the anti-establishment Five Star Movement. Since November 2011 four prime ministers have taken office not because voters chose them, but because of a financial emergency, factional squabble, party coup and failed constitutional reform.

Matteo Renzi, the former premier and PD leader, suffered a blow this month when it emerged that Tiziano Renzi, his father, and Luca Lotti, a close political ally, had been caught up in a judicial probe into suspected graft in public procurement.

The most disturbing comparison between 1992 and the present day concerns the Italian economy, which is projected this year to be the slowest-growing in the eurozone. Public debt is more than 132 percent of gross domestic product. Unemployment is almost 12 per cent; the youth jobless rate is over 37 percent.

As a consequence, ever more Italian politicians question the merits of eurozone membership. So do Italian voters. In a Eurobarometer poll published in December, 47 percent called the euro “a bad thing” for their country and only 41 percent “a good thing”. This is the big difference with 25 years ago.

As long as the moderate left or right governs Italy, it may be possible to contain this disenchantment with the EU and the euro. But the PD’s fissures are the latest sign that the party system is cracking under the strain. The Five Star Movement is waiting in the wings.

PD Suicide

Via email, Eurointelligence comments on the costs of Matteo Renzi’s PD’s suicide mission.

We have been saying it for a while – political parties that preoccupy themselves with their internal divisions are electorally doomed. It is happening to the Labour Party in the UK, and it is now happening to the Partito Democratico. This tendency is now being picked up by the polls, which show the Five Star Movement ahead of the PD by five points. We are now at the point where it becomes increasingly improbable for the PD to regain power after the next elections. They cannot do it on their own, and they do not have natural coalition partners to help them. Even a hypothetical alliance between Matteo Renzi and Silvio Berlusconi would not, on its own, meet the 40% majority threshold for a coalition, and there is no way the two parties would enter the election with a pre-arranged electoral pact in the first place.

The Five Star Movement is now only 6 points away from an absolute majority that would allow it to govern on its own – assuming that the present electoral law for the chamber of deputies forms the basis of a new electoral system for the Senate. If one adds up all the non-extremist parties (and let’s count Berlusconi’s Forza d’Italia among them for the sake of argument), one would get to just over 40% – with the PD, Forza Italia, and the New Centre Right of foreign minister Angelino Alfano which only gets 2.8%.

Worse for the PD, its support will fall even more after the split of the party becomes a reality – which it will before the elections. The poll puts the hypothetical support for PD dissidents at 7.1%, which would reduce the PD’s overall support to under 20%. The new left, together with the old left, would have the support of close to 10%. All this shows that there can be only two election outcomes: either a fragmented parliament, with unstable and shifting coalitions, or a majority reign of the Five Star Movement. The Five Star Movement promises not to enter coalitions, and it will be interesting to see whether the party maintains that position after the elections.

On the issue that interests us the most – Italy’s future in the EU, and in the eurozone in particular – the picture is even more grim. The only two parties that unconditionally support Italy’s membership of the eurozone are the PD and the New Centre Right. Forza Italia is toying with the idea of a parallel currency, while the Five Star Movement has pledged a consultative referendum on Italy’s future in the euro. While this referendum can legally not end Italy’s membership in the eurozone, it would send a devastating signal to the outside world.

The Five Star Movement has its own share of scandals – for example involving the new municipal government in Rome, and the party is in an internal state of war over the candidate for the mayoral elections in Genoa. But none of that seems to stick.

Our conclusion is that the Five Star Movement is rational to avoid alliances with other parties, as this approach is paying off electorally. With that strategy in place, they will either gain a sufficient majority (over 40%) at the next elections, or in the one after that.

Italian Polls

Eurointelligence referenced a specific Italian poll that has been since superseded.

However, support for PD is clearly on the wane. Let’s take a look at all of the recent Italian Election Polls.

In only one poll since March 9 (clearly an outlier) did Matteo Renzi’s PD party come in first place. Moreover, PD has not yet split for polling purposes but it will.

I fail to see how M5s was “6 points away from an absolute majority that would allow it to govern on its own” as Eurointelligence states, but a coalition of eurosceptic parties totaling over 50%  is easily at hand.

Support for M5S (Five Star Movement) + Fi (Forza Italia) + LN (Lega Nord), all eurosceptic parties, totals 54.5%in the most recent poll.

Forza Italia is former prime minister Silvio Berlusconi’s  party.

On March 9, Bloomberg reported  Enter Berlusconi: A Man, a Ban, and His Plan to Restore the Lira.

If elections were held today, eurosceptic parties would easily hit not only a 40% threshold but a 50% threshold as well.

Whether eurosceptic could agree to form a coalition is another matter, but I suspect they would, especially if the alternative was a minority government led by PD.

Mike “Mish” Shedlock