November 3, 2011

Berlusconi Could Fall as Italy Teeters

Failure to find economic solution endangers government

Silvio Berlusconi, who has resisted calls to step down as prime minister of Italy, may be on the way out regardless, if former party loyalists continue to rebel. The failure of his Cabinet to find consensus on an economic reform program could drive him from office and send the country in a new direction.

According to a Reuters report on Thursday, the consistent failure of the Berlusconi government to push through financial reforms strong enough to satisfy world markets has resulted in continually escalating costs for Italy's debt. Eurozone and G20 members alike are seeking substantial actions from Italy lest fears of contagion threaten Europe's economy; fears that debt woes may spread from Greece to Italy are rampant.

Yet, Berlusconi has failed to enact any substantial reforms, amid growing calls for his resignation. The latest failure took place late Wednesday, with his supporters accusing Economy Minister Giulio Tremonti of blocking the measure's approval.

Italy's president, former communist Giorgio Napolitano, on Tuesday night took the extraordinary step of calling for decisive action by all parties to push through reforms, even to the point of issuing a veiled warning to Berlusconi that he could be replaced if he fails to act.

Despite the fact that the office of president is largely ceremonial, Napolitano's popularity at 80% is far greater than that of Berlusconi at 25%, and his words carry great weight. After his statement, Napolitano began Wednesday to hold what he terms "pre-crisis" consultations with political parties that are apparently geared toward forming a new national unity government.

Six defectors from Berlusconi's coalition wrote in a letter published in the daily newspaper Corriere della Sera that Italy needed a "new political phase and a new government. We are asking you to take an initiative which is appropriate to the situation," they wrote, adding, "Be the backer of a new political phase and a new government which would have the task, from now until the end of the legislative term, of implementing the agenda agreed with our European partners and with it, the indications which came from the European Central Bank."

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