Who Holds the Keys to Italy's Political Impasse? The Showbiz Candidates

Media tycoon Silvio Berlusconi and former comedian Beppe Grillo will help decide the fate of the country -- and perhaps Europe's along with it.

ROME – Italy is still without a government as its political crisis drags into its sixth week, while two figures with show business roots hold the keys to how it will play out, with Europe’s fourth largest economy -- and perhaps the euro currency -- hanging in the balance.

Billionaire media tycoon Silvio Berlusconi and former standup comedian Beppe Grillo are two of the three main players in a political drama that has slowly and painfully played out after Italy’s Feb. 24-25 national vote failed to award enough votes to any single bloc to give it a majority in both houses of parliament

The third figure, center-left candidate Pier Luigi Bersani, is a career politician whose candidacy has failed to gain traction with many voters.

Bersani, whose allies hold a majority in parliament’s lower house, has tried and failed to form a minority government. He has repeatedly been rebuffed in efforts to form an pact with Grillo’s forces, while Berlusconi’s offers to participate in a “grand alliance” with Bersani have been turned down. The latest development is that Bersani and Berlusconi are set to meet to discuss some possible cooperation deal that Bersani’s advisors say could only work if Berlusconi stays on the outside and makes only minimal demands of the government.

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Add to that the fact that the term for Italy’s president, Giorgio Napolitano -- who must oversee the formation of a new government -- will conclude next month. If the situation is not resolved by the time Napolitano retires, the same deadlocked parliament that cannot agree on a prime minister must select a president.

It’s a scenario that would have been unimaginable a year ago, when the controversial Berlusconi was less than six months removed from an in-disgrace resignation as prime minister and Grillo was still a relatively marginal figure known for the biting commentary on his blog and in interviews.

“The fact that a controversial television tycoon and a comedian and blogger will have more to say than anyone else what Italy’s fate will be is a fairly astonishing development,” said Antonello Malatesta, a political scientist. “If this deadlock isn’t broken and if that means Italy falls victim to Europe’s credit and debt crunch, then history might eventually end up recording that Berlusconi or Grillo brought down the euro zone.”

It’s not the first time at least some of that risk arose: before stepping down from his third term as prime minister in 2011, Berlusconi (whose media holdings include three national Italian TV networks, one in Spain, and the Medusa film production house) was seen as leading Italy perilously close to the European debt crisis. Those fears helped drive him from office.

Though foreign ratings agencies have recently downgraded Italy’s credit score, and stock market and bond investors have shown some nervousness over the current crisis, the medium-term fear is that the country’s political impasse may render Italy incapable of confronting rising borrowing costs and investor jitters sparked by the ongoing crisis in Cyprus and other slow growing euro-zone economies.

If a Greece- or Cyprus-level crisis spreads to Italy, it would be almost impossible for the country's beleaguered European partners to bail it out. And if Italy's economy collapsed, it would likely take the 17-nation euro-zone with it.

"In Italy, this seems like a political problem, but the major figures involved are playing with fire," said Javier Noriega, chief economist with investment bankers Hildebrandt and Ferrar.

Perhaps surprisingly, the showbiz community has not come out in favor of either of the two figures with ties to the industry. Instead, support has been split along ideological lines, with Bersani on the left, Berlusconi on the right, and Grillo attracting the anti-establishment vote.

Equally surprising is that polls show very few Italians blame Berlusconi’s Lazarus-like rise from political irrelevance for the current stalemate: Polling company Opinioni said Wednesday that only 5 percent of Italian blamed Berlusconi and his allies for the protracted crisis, compared to a little less than 20 percent for Bersani and a little more than 20 percent for Grillo.

Twitter: @EricJLyman