ROME—Silvio Berlusconi, Europe's most indefatigable politician, has pulled off another come back.
Associated Press Former Prime Minister Silvio Berlusconi, seen here casting his ballot in Milan during Italy's elections on Sunday.
Saddled with scandal, felled by the sovereign debt crisis, deserted by his traditional allies, the 76-year-old Mr. Berlusconi was on his political deathbed only a few months ago when he pledged to quit politics "for the love of Italy."
He didn't keep that promise. And on Monday Mr. Berlusconi silenced naysayers and stunned financial markets when his conservative coalition got enough votes to deny its main rival of the parliamentary support it needs to form a stable government. In the key lower house of parliament, Mr. Berlusconi came within a whisker of victory—a scenario that was deemed unthinkable just two months ago.
The outcome won't propel him back into the prime minister's office. However, Mr. Berlusconi has positioned himself—for the 19th year running—as a pivotal powerbroker in Italy's political life.
"We all need to reflect on what we can do for Italy … I don't think Italy can do without being governed," Mr. Berlusconi said in his first, and unusually muted, public remarks on Monday's election results. Mr. Berlusconi said the prospect of holding another set of elections within months was "not useful."
A general election has left Italy with no clear winner. WSJ's Chris Emsden suggests that even a grand coalition of the major parties would prove unworkable, making another election more likely. Photo: Reuters
Some analysts interpreted Mr. Berlusconi's comments as an overture to the rival Democratic Party to forge a national unity government aimed at changing the country's electoral law and introducing economic overhauls Italy needs to kick start its laggard growth.
Italy "is a country that needs governing," said Franco Pavoncello, a professor of politics at John Cabot University in Rome. "If they succeed in putting together a grand coalition, German-style, this is something that could last a couple of years."
It is far from clear whether Mr. Berlusconi and Pier Luigi Bersani, leader of the Democratic Party, could overcome their differences and rule the country together. Already existing divisions were sharpened over the course of a contentious campaign, in which Mr. Berlusconi railed against the Democratic Party as "communists" and Mr. Bersani publicly threatened to subject Mediaset SpA, the private broadcaster owned by Mr. Berlusconi's family, to a regulatory overhaul if he won.
The euro fell and European stocks tumbled Tuesday. But most concerning is the return of euro-zone contagion, as the borrowing costs of Italy and other debtors start to rise again, says Dow Jones's Katie Martin.
The fact that Mr. Bersani—who had been expected to win the election—came up short is a measure of Mr. Berlusconi's deft salesmanship and media savvy, analysts say. Mr. Berlusconi harnessed Mediaset and dominated the country's airwaves over the past three months, wooing voters with promises to reimburse an unpopular property tax and waxing romantic over his relationship with his 28-year-old girlfriend.
"This extraordinary result is completely and exclusively thanks to Silvio Berlusconi, architect of a memorable feat," said Sandro Bondi, a lieutenant in Mr. Berlusconi's People of Freedom Party.
The flood of TV appearances by the perennially tanned former premier outraged his critics. But the blitz managed to mobilize Mr. Berlusconi's base—small-business owners and professionals—which had largely been planning to desert the voting booths until Mr. Berlusconi pushed back onto the scene.
WSJ's Giada Zampano in Rome feels the pulse of Italian disaffected voters as they head to the polls for Italy's most-watched elections in decades. Photo: EPA
"He returned to TV playing that guy everybody knows," said Alessandro Campi, a professor of political science at the University of Perugia. "He's planted a seed deep in the public imagination."
Mr. Berlusconi also possesses an uncanny ability to transform perceived weaknesses into political strengths. While many economists and investors assumed Mr. Berlusconi had been fully discredited in the eyes of the Italian public when, in late 2011, he was forced to hand power over to an emergency government run by Mario Monti.
However, Mr. Berlusconi responded to the ouster with an act of political judo, blaming Italy's economic woes on the tax increases and pension cuts introduced by Mr. Monti's government. In early December, his party brazenly pulled its support from Mr. Monti in parliament bringing down the emergency government. Since then, he has railed against Mr. Monti's measures including an unpopular property tax, which Mr. Berlusconi promised to reimburse in a letter sent to homes across Italy.
News of political gridlock in Italy helped hammer U.S. markets overnight, but reaction in Asia has been mostly mild. The WSJ's Jake Lee explains why Europe's latest concern is not weighing on Asian markets.
Navigating the Next Steps
How Italy forms a new government
- Based on election results, the Italian president holds talks with leaders of the parties that have won parliamentary seats, the speakers of the two houses of Parliament and any living former Italian presidents (in this case, only one, Carlo Azeglio Ciampi).
- After the talks, the president appoints a person—usually the leader of the party or coalition that won the majority in Parliament—to form a new government.
- Once formed, the new cabinet is sworn in. It then faces separate confidence votes in the two houses of Parliament.
- The process takes no less than three or four weeks. In 2008, Silvio Berlusconi's center-right government was sworn in 24 days after the general elections after winning in a landslide. With closer election results, the process is likely to take longer.
"He was saying the crisis was created by somebody else. He has this incredible capacity to create a new narrative," Mr. Pavoncello said.
Carlo Balzerano, a 36-year-old financial consultant, said Mr. Berlusconi earned his vote because "the only thing that matters to Italians is jobs and cutting taxes. Berlusconi is the only one who speaks to the concrete problems facing Italians."
Mr. Berlusconi returned to that theme Tuesday, saying Mr. Monti's austerity measures had plunged the country into a "dangerous recessionary spiral."
"I've said I'd get drunk if [Monti] failed to get 10%" of the vote, Mr. Berlusconi said. Mr. Monti garnered 9.1% of the vote for the Senate and 10.5% for the Chamber. Mr. Monti "made it, so I'll give him some bottles," Mr. Berlusconi quipped.
At times, the former premier even appeared fortified by scandals and criticism that might have crippled lesser politicians. He has repeatedly made political hay of a criminal trial, in which he's charged with paying an underage woman for sex and abusing his power in an attempt to cover up the relationship. Mr. Berlusconi made dramatic court appearances denying the charges and denouncing the trial as a form of persecution by politically motivated magistrates.
When Mr. Berlusconi went to vote on Sunday, he spotted a young woman sulking nearby, her face planted in her palms. "You should learn to smile more," he said, flashing a smile at the woman and casting his ballot.
Write to Stacy Meichtry at stacy.meichtry@wsj.com
