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25 June 2012 By Hugo Dixon

Mario Monti is pinned between two comedians. Beppe Grillo, a professional comic and leader of Italy’s so-called second force, wants the country to quit the euro and default on its debts. Silvio Berlusconi is also toying with euroscepticism as he attempts a comeback. This makes it much harder for a technocrat prime minister to manage the crisis.

The phenomenal rise of Grillo’s Cinque Stelle movement has shaken up the political landscape. In two months, its support has shot up from 7 percent to 20 percent, according to SWG, the pollster. Grillo has benefited from disgust with the ruling class, in much the same way as Alexis Tsipras, the radical leftwing politician who almost won Greece’s last election. The Italian comic’s anti-politician message, which initially appealed mainly to people on the left, is now striking chords on the populist right.

Berlusconi’s centre-right PDL, which is supposed to be backing Monti, has been the principal victim of Grillo’s rise. Its support has declined from 25 to 17 percent. The former prime minister has therefore himself started suggesting that either Germany should quit the euro or Italy should bring back the lira.

If Monti had his own party, these shifts in popular mood might not matter too much. But he doesn’t. What’s more, an election must be held by next spring and there are even fears that Berlusconi may force an early one in the autumn.

Monti, who has lost momentum after a strong start as prime minister, may yet find a way of pushing through a second wave of reforms. But confidence in him has collapsed, from 71 percent when he took over from Berlusconi in November to only 33 percent now. Although he is backed by the centre-left PD, the country’s most popular party, he risks becoming a lame duck.

The concern is that euroscepticism from Italy’s second and third political forces could create a negative feedback loop. Investors could push up bond yields as they worry about what comes after Monti – further undermining confidence, exacerbating the recession and sowing more doubts about the euro’s survivability.


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