Crisis mounts around Italy’s Berlusconi


Reuters

The meeting left Prime Minister Silvio Berlusconi with nothing concrete to take to the G20 summit in France on Thursday and still under strong domestic pressure to hand power to an emergency government of national unity.

A statement from Berlusconi’s office gave no detail of any measures decided at the meeting, which was intended to ease market pressure on Italian bonds and shares. The cabinet failed to approve an emergency decree as Berlusconi had hoped and decided instead to add a series of measures — yet to be drawn up in detail — to the budget bill currently before the Senate.

Berlusconi was expected to face intense pressure from his G20 partners in Cannes to produce a clear set of concrete reforms to stop financial markets from targeting Italian bonds, the latest victims of the euro zone financial crisis.

Roberto Calderoli, a minister from the increasingly restive Northern League party, said after the cabinet meeting he was “totally disappointed” by the failure to adopt an emergency decree.

Susanna Camusso, the head of Italy’s largest trade union, the CGIL, said the outcome meant Italy must attend the G20 “without a credible leader and without the decisions which have been promised but not taken.”

The government statement said the cabinet had “examined a set of urgent measures to support the Italian economy” and had approved an amendment to the budget in line with commitments Berlusconi made to the European Union in a letter last week.

It offered no details, and government sources said technical experts would be working to draw up the amendment on Thursday.

The measures will include tax breaks for infrastructure companies, a reduction in red tape for business and steps to promote apprenticeships to reduce youth unemployment, the sources said. There was still no agreement on more contentious issues such as labour market reform or a wealth tax. Berlusconi held four hours of meetings with senior officials and ministers in the morning ahead of the cabinet meeting.

Yields on 10-year Italian BTP bonds fell slightly on Wednesday from the highs reached on Tuesday but were still at more than 6.2 percent, even with support from the European Central Bank’s bond-buying operation.

Greece’s surprise decision to call a referendum on austerity measures demanded by the European Union has worsened fears about the stability of other heavily indebted economies like Italy, the euro zone’s third largest economy.

As market turbulence spread, threatening a wider euro zone meltdown, Berlusconi has come under fire from all sides over his handling of the crisis and his failure to pass decisive reforms.

“It’s useless to make sacrifices to get out of the crisis if Silvio Berlusconi remains at the head of the government,” said Pierferdinando Casini, head of the centrist UDC party.

President Steps In

In a highly unusual statement late on Tuesday, President Giorgio Napolitano called on Berlusconi to pass long-promised measures without delay and indicated he was looking at how much support there was for reform outside the ranks of the centre-right government.

Napolitano cannot dismiss Berlusconi as long as he has a majority. But if divisions in the coalition deepen and provoke a parliamentary crisis in which the government loses a confidence vote, he would have the power to name a new administration.

“That was a warning,” said Anna Chimenti, a professor of constitutional law at the University of Foggia. “Until there is a crisis, Napolitano is like a referee who blows the whistle when rules are not respected. He’s blowing the whistle now.”

Andrea Ronchi, a PDL deputy who had lunch with Berlusconi on Wednesday, told reporters the 75-year-old prime minister had shown no signs of wanting to stand down.