Italy Faces Threat of Parliamentary Deadlock

It's the nightmare scenario for both Prime Minister Silvio Berlusconi and opposition challenger Romani Prodi.

The lower house Chamber of Deputies and the upper house Senate have equal powers, so one team must win control of both to avoid placing Italy in a legislative deadlock.

"It would be a disaster," warned Berlusconi ahead of the polls.

The official count early Tuesday gave the lower house by a whisker to Prodi's center-left bloc, but the Senate result was still in the balance with only one seat separating the main groupings as counting continued.

Prodi claims victory

Election officials said Prodi's grouping had won 49.8 percent of the lower-house vote compared to 49.7 percent for Berlusconi's center-right coalition.

The result automatically gave Prodi's group a majority of at least 340 of the 630 seats in the lower house, leading the man known to Italians as "the professor" to claim victory.

"Today, we have turned a page," Prodi told an ecstatic crowd from a stage outside the headquarters of his Union coalition in central Rome.

"We will always be united. We will govern for five years," he said.

But the final result was not yet in the bag. In the 315-seat upper house Senate, Prodi's Union bloc had 154 seats compared to 155 for Berlusconi's House of Freedoms coalition. Results for six Senate seats for overseas Italians had yet to be finalized.

Changes to electoral law

Experts said the threat of a divided parliament had increased with changes to the electoral law enacted since the last election in 2001.

The new rules restore the old system of full proportional representation along with the risk of unstable governments.

Under the previous rules, in effect since 1993, only 25 percent of seats were decided by proportional representation, and 75 percent through first-past-the-post constituency races.

A party had to win at least five percent of the vote to get into either chamber.

But in the 2006 election, like those that produced dozens of governments in Italy since World War II, the coalition that wins the most votes, even by a small margin, will automatically be awarded 340 seats in the 630-seat lower house Chamber of Deputies.

Only a majority of more than 55 percent -- mathematically impossible if the latest election results are correct -- would entitle the coalition to further seats.

In the 315-seat Senate, however, the seats are determined region by region. The winning coalition in each region will be awarded at least 55 percent of that region's seats in the chamber.

"These new rules have encouraged the main parties on both fronts to seek alliances with a large number of minuscule formations, thus exacerbating the risk of political fragmentation within each of the two coalitions and possibly diluting the content of the two platforms," said Vincenzo Guzzo, an economist with Morgan Stanley investment bank.

"Political paralysis"

"Second and foremost, because of the different rules affecting elections for the Chamber of Deputies and the Senate and the tight margin in the race, we should not underestimate the chances of a split parliament that would ultimately result in political paralysis."

Experts say the split could result in several possibilities, including a German-style "grand coalition," a technocrat government, or even fresh elections.

Party leaders said during the campaign they would prefer fresh elections in the event of such an outcome.