What comes next for Monti and Italy as elections near?

ROME Sun Dec 9, 2012 12:58pm EST

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ROME (Reuters) - Italian Prime Minister Mario Monti's decision to resign before the end of his mandate has opened the prospect of two months of campaigning before an election now expected to take place in February.

Here are answers to some of the questions thrown up by the announcement, which capped three days of political tension in Rome triggered when former Prime Minister Silvio Berlusconi withdrew the support of his party in parliament.

DOES THIS MEAN THAT MONTI WILL NOW RUN IN THE ELECTION?

That is so far unknown. He has previously said he would not stand but potential allies among the smaller centrist groups note he has not definitely closed the door on the idea either.

Even if he is not a candidate, he could act as patron to a centrist grouping and campaign on a pro-European Union, economic reform platform.

He has said he will be available if no stable government can be formed. Many also expect that, regardless of whether he stands, he will play some role after the elections, possibly as president or even as a finance minister in a pro-reform government headed by a politician.

WHAT IS THE LIKELY RESULT OF THE ELECTION?

At this stage, the centre-left Democratic Party (PD) has a strong advantage and its leader Pier Luigi Bersani is the most likely new prime minister.

The PD is riding high in opinion polls which suggest it could gain more than 30 percent of the vote, ahead of the anti-establishment comic Beppe Grillo's 5-Star Movement, the wild card in the game, which is polling around 20 percent.

Silvio Berlusconi's struggling centre-right People of Freedom (PDL) is deeply divided and risks defections from several high-profile members who supported Monti. It is at around 15 percent in polls.

The new centrist movement founded by Ferrari chairman Luca Cordero di Montezemolo, which is often seen as a possible vehicle for Monti, is polling at around 2 percent, though that could change if the current prime minister decided to run.

WILL THE PD BE ABLE TO FORM A STABLE PARLIAMENTARY MAJORITY?

Italy's election law gives the largest party in the lower house an automatic 54 percent majority, regardless of whether it wins a majority of votes, so the PD looks likely to win comfortably there.

Things are more complicated in the Senate, where there are separate contests in each of the 17 main regions as well as three other smaller territories.

This has made it difficult for the left in past elections because of its traditional weakness in the richer and more populous north of the country where there are more Senate seats.

Much will depend on whether the PDL can revive its old alliance with the regionalist Northern League and win the vital northern regions of Lombardy and Veneto as well as in its traditional heartland of Sicily.

"Just like the United States had battleground states such as Ohio, Florida and Wisconsin, Italy's battleground regions will be Lombardy, Veneto and Sicily," says Roberto D'Alimonte, a professor of politics at the University of Luiss in Rome and Italy's leading expert on electoral systems.

If Berlusconi can unite his badly-divided camp, he could hope to do well enough in the Senate to prevent the PD from getting legislation through parliament easily, which could shorten the life of any centre-left government.

WHAT ISSUES WILL THE ELECTION BE FOUGHT ON?

Berlusconi's attacks on Monti suggest voters will face a choice between pro-European candidates like Bersani on the centre and centre-left and an anti-Monti front running from Berlusconi to Grillo, who wants a referendum on the euro.

The PD says it will stick to Monti's budget commitments to Italy's European partners while putting more emphasis on jobs and growth and softening the impact of austerity measures on workers, a big priority for its allies in the union movement.

Berlusconi says Monti is in thrall to German Chancellor Angela Merkel and has dragged Italy into recession with his austerity policies. He pledges to cut taxes and in particular scrap a deeply unpopular housing tax that is central to Monti's deficit cutting plans.

Grillo, a fiery critic of both Monti's austerity policies and Berlusconi's scandals, has also pushed the privileges of the political class to the forefront and tapped deep public anger over the crisis and Italy's leaders which may be difficult to control.

WHAT CHALLENGES WILL THE NEXT GOVERNMENT FACE?

The next government must convince international financial markets that it is serious about controlling public finances and getting Italy's stagnant economy moving again, otherwise last year's financial crisis will return.

At the same time, it must reassure an Italian public weary of tax hikes and spending cuts that its sacrifice is worthwhile by creating jobs, restoring prosperity and gradually lowering the tax burden or it will risk seeing social tensions rise.

(Reporting By James Mackenzie and Steve Scherer; editing by Jason Webb)

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