- Associated Press - Friday, December 7, 2012

ROME — Although Italy’s Silvio Berlusconi resigned in disgrace a year ago, has since been convicted of tax fraud and now faces plunging poll numbers, the media baron is showing he still has the power to put pressure on his successor, Premier Mario Monti.

With Europe still deep in its debt crisis, it doesn’t take much to make the markets nervous. That’s what happened Thursday when the 76-year-old Berlusconi withdrew his party’s support for Monti's government, threatening a premature end to its ambitious reform program.

Economists for Unicredit, Italy’s largest bank, say the decision was “significant and tends to confirm that the next few months will be bumpy” for Monti, with the possibility now looming of an early election before the expected date in March.

“The fact that the electoral campaign moves into top gear certainly increases the political uncertainty,” said Chiara Corsa and Loredana Federico in their analysis.


The Italian economy, the third-largest of the 17 European Union countries that use the euro, is in recession as the government enacts tough measures to get a handle on its debts. Italy has the second-highest debt level as a percentage of its GDP in the eurozone — at 126 percent. Only Greece’s debt is higher with 150 percent.

Monti's government of unelected technocrats won both confidence votes by a wide margin Thursday, but the vote signaled dangers ahead for the technocratic premier.

With opinion polls showing that the main center-left party, which supports Monti, in line to win an election, the conservative Berlusconi appears to be distancing himself to capitalize on discontent over new taxes and rising unemployment.  He has complained that Monti’s policies have put Italy into a “spiral of recession.” 

Berlusconi, three times premier, has hinted that he will run again. He claims his allies are pressing him to seek election again, hoping that Monti’s painful austerity measures will win votes for the center-right.

Still polls say Berlusconi’s party would drop to less than 15 percent of the next vote.

“He can’t see himself leaving the stage,” said Giovanni Orsina, a political science professor at Rome’s LUISS university and author of “The Right After Berlusconi.”

 “He actually believes he is the best, that he can’t be substituted,” said Orsina.

But Orsina and others say Berlusconi’s legal woes also play a role.

The government has drafted legislation making candidates who have been convicted of crimes ineligible to run for office.

 Berlusconi is now appealing an October conviction for tax fraud for which he received a sentence of four years in prison. He is also standing trial on charges of having sex with an underage woman and using his office to cover it up with a verdict expected early next year. He has denied the charges.   

Berlusconi’s top political aide and designated political heir, Angelino Alfano, insists the media mogul’s party had no intention of sparking a crisis that could bring down the government.

Story Continues →