Italy's political class struggles for consensus

November 10, 2011

Under intense pressure to fend off a full-blown debt crisis, Italy’s fractious lawmakers appeared to be coalescing Thursday around an emergency plan that could see Prime Minister Silvio Berlusconi step down this weekend to make way for an interim government headed by a political outsider, Mario Monti.

Market tensions eased slightly during the day after Italy managed to auction off a fresh batch of bonds, albeit at alarmingly high interest rates, and the European Central Bank intervened to halt the upward spiral of Rome’s borrowing costs. But lingering fears that the country was heading toward a default that would jeopardize the euro and potentially wreak havoc on the global economy escalated the pressure on Italy’s parties to stop bickering and work to restore confidence.

To that end, calls were mounting to name Monti — a former member of the European Commission with no strong political base — to form a new “unity government” that might steer Italy out of the crisis. Berlusconi himself appeared to be reconsidering his initial opposition to the plan Thursday. But members of his powerful People of Freedom party remained divided about backing Monti, with some holding out for new elections that could leave Italy with a power vacuum until January.

Any move toward new elections could complicate attempts to speedily approve a package of far-reaching economic reforms that analysts say are needed here to regain market confidence.

Still, political leaders were apparently agreed on one thing: Berlusconi, whose divisive leadership and denial of the crisis fueled its acceleration in recent weeks, must be shown the door by this weekend.

The 75-year-old media mogul earlier this week pledged to resign following the approval of a budget bill that is now expected to clear Italy’s Senate on Friday and its lower house by Saturday night. After its approval, Berlusconi is expected to tender his resignation to Italy’s ceremonial head of state, President Giorgio Napolitano.

“It would be better to vote, but the markets won’t wait months,” Corriere della Sera quoted Berlusconi as telling lawmakers Thursday.

The budget bill includes some relatively minor economic reforms demanded by the European Union, including buyouts for public workers and a sell-off of some state lands. But it is seen as only a precursor to a far more sweeping package of reforms Italy is under pressure to produce in the coming weeks to prove it has the will to jump-start its moribund economy.

Hopes were resting on Monti to form a unity government capable of ushering through such a politically controversial bill. Like Greece’s new prime minister, Lucas Papademos, Monti is a technocrat whose selection would underscore the public’s loss of faith in the ability of traditional politicians to manage a dangerous financial crisis.

Some lawmakers have at least one big incentive to back a unity government under Monti: If snap elections are held, many incumbents would not have been in office long enough to quality for the exceedingly generous pensions-for-life offered to alumni of the Italian Parliament.

But Berlusconi’s right-wing coalition partners, the North League, flatly rejected a new government under Monti on Thursday, insisting instead on new elections. The head of Italy’s largest opposition force, the Democratic Party, said in an interview that he would support a unity government as long as it “represented a break” with Berlusconi, his cabinet and his policies.

“The first thing we must have to get our credibility back is a new face,” Pierluigi Bersani said. “Italy is not Greece, or even Spain. Italy is one of the world’s ten richest countries, and it is up to us now to show that we are prepared to deal with this crisis.”

Special correspondent Sarah Delaney contributed to this report.

Anthony Faiola is The Post's Berlin bureau chief. Faiola joined the Post in 1994, since then reporting for the paper from six continents and serving as bureau chief in Tokyo, Buenos Aires, New York and London.
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