7 Nov 2011

Berlusconi ‘to resign’ as debt crisis grips Italy

Journalists close to Silvio Berlusconi say Italy’s embattled prime minister is about to resign, as a crunch vote looms in the Italian parliament.

With Italian borrowing costs rising, Giuliano Ferrara, editor of the Foglio newspaper, said Europe’s longest-serving leader did not have long left. “That Silvio Berlusconi is about to resign is clear. It is a question of hours, some say of minutes,” he said.

Franco Bechis, vice-director of the pro-Berlusconi Libero newspaper, said he would go on Monday night or Tuesday morning.

The emphasis during the European debt crisis has been on Greece, where a coalition government is being formed after George Papandreou agreed to stand down as prime minister.

Athens to Rome

But with the yield on Italian bonds increasing to a 12-year high due to market fears about the country’s debts and political instability, attention has shifted from Athens to Rome.

Ross Norman, of bullion brokers Sharps Pixley, said: “The issue, which people are very focused on at the moment, are the Italian senior bond rates. When the Greeks got to 7 per cent they ran up the flag. With Italy at 6.6, we’re getting very close to the line.”

Ireland and Portugal were forced to accept European bailouts when their borrowing costs rose to 7 per cent.

Parliamentary vote

Italy is the eurozone’s third biggest economy, and Mr Berlusconi is facing a vote in the Italian parliament on Tuesday. He has been criticised for not doing more to defuse Italy’s debt crisis, and is trying to win over waverers within his centre-right coalition before the vote.

The majority no longer exists. Interior Minister Roberto Maroni

It is unclear how many deputies will vote with the opposition, but Interior Minister Roberto Maroni indicated that the end was near. “The latest news leads me to think that the majority no longer exists and that it is useless (for Mr Berlusconi) to be implacable,” he said.

But Mr Berlusconi sounded a defiant note on Sunday, telling party supporters: “We have checked in the last few hours and the numbers are certain, we still have a majority.”

Graphic: 10-year yields on government bonds

‘Well-deserved jobs’

A coalition deputy said the prime minister was prepared to reward supporters with “well-deserved jobs” in government. The centre-left opposition said it was planning a motion of no-confidence in the government that would bring down Mr Berlusconi even if he survived Tuesday’s vote.

“Berlusconi is bluffing in a last desperate attempt to save himself. He no longer has a majority in the chamber,” said Dario Franceschini, from the main opposition Democratic party.

Gianfranco Fini, a former ally of the prime minister, said: “The government must understand that it is not credible even if it wins in parliament by a vote, because with a majority of one vote you can survive, but you cannot govern.”

Italian newspapers have estimated the number of potential defectors at 20-40, which would be more than enough to topple the government.

At the G20 summit in Cannes last week, Mr Berlusconi was forced to accept regular monitoring from the IMF on his progress in implementing reforms.