ROME The political gridlock in Italy revives a question that hasn't been heard lately: Is the eurozone crisis really over? Judging by the panic that seized financial markets on Monday, and carried over into European stock and bond trading Tuesday, the answer seems to be no.
After months of calm, investors are jittery not only because Italy, once again, seems to have become ungovernable after an inconclusive political election. It is also because voters in the eurozone's third-largest economy after Germany and France soundly repudiated government austerity policies that the region's leaders have long embraced but that have hampered growth in Italy and elsewhere in the euro currency union.
By supporting a protest-vote candidate, comedian Beppe Grillo, and backing the return of former Prime Minister Silvio Berlusconi, who has vowed to reject austerity, Italians appear to be embracing a return to nationalism, experts say.
Swept aside by the Italian elections was the technocratic government led for the past 13 months by Mario Monti, who has been crucial to an unwritten accord: The European Central Bank promised to help contain the financial contagion that was threatening the eurozone as long as political leaders like him made headway in improving their economies.
The upheaval in Italy means that other eurozone leaders may no longer have a reliable partner in the drive to create a more durable currency union, and that Rome's voice in European policymaking will be diminished, for now at least.
"This brings back all the political risk issues" that had seemed to fade from the eurozone, said Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington.
To be sure, Europe's debt crisis is not nearly as dire as it once was. Even though Italy's borrowing costs, as measured by its 10-year bond yield, hit a three-month high on Tuesday of nearly 4.9 percent, that is still nowhere near the 6.5 percent danger zone of last summer.
And despite renewed fears of instability, no one is talking about a breakup of the eurozone as might have happened last year if such political uncertainty had beset one of Europe's most crucial economies. The newfound stability follows a shift in sentiment last autumn after European politicians, led by Chancellor Angela Merkel of Germany, made clear that the euro union is here to stay no matter what.
Experts said the vote served as a warning shot that a new round of political instability could be coming in the neighboring large economies of Spain and France, whose leaders have also adopted austerity programs to keep the euro debt crisis from engulfing their economies despite concerns that the programs are impeding the economic rebound that might help them grow out of financial distress.
With Italy sidelined and France and Spain weakened, Germany could be even more dominant in European policy forums. Merkel may be tempted to talk even tougher with weaker eurozone members. And facing elections herself in the fall, she may be less willing to commit German taxpayer money to holding together the currency union.
"We are going to have six or nine months of Italy being absent, which leaves Germany as dominant as ever," Kirkegaard said.
Perhaps more significant is the role of the European Central Bank, in this period of renewed eurozone uncertainty. The ECB rode in as a white knight last September by agreeing to buy large amounts of bonds from countries with shaky finances, including Italy, to calm a contagion of fear then sweeping the eurozone. The ECB, run by Italy's former central banker, Mario Draghi, vowed to do "whatever it takes" to hold the euro union together.
The issue now, experts say, is that Draghi's promise was based on a quid pro quo with eurozone governments. If countries agreed to conditions designed to make their economies perform better, the ECB would buy their bonds to hold down market interest rates.
So far, the ECB has not bought any bonds the mere commitment reassured international markets. But Italy's new political turmoil might now prompt investors to test the ECB's resolve. If so, many experts doubt whether the bond-buying program is workable for Italy at least.