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29th Mar 2024

Italian government survives after Berlusconi u-turn

  • Letta survived as Prime Minister after Berlusconi's party rebelled (Photo: Palazzo Chigi)

Italian PM Enrico Letta's coalition government on Wednesday (2 October) survived a confidence vote after former leader Silvio Berlusconi backed down from plans to withdraw his party's support.

The vote of confidence passed the Senate by 235 to 70 in favour of the government.

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Berlusconi's party holds the majority in the upper chamber and the media tycoon had threatened to topple the government in retaliation over his imminent ban from the Senate after being convicted of fraud.

Last week, all five ministers from Berlusconi's party said they would resign in solidarity with their boss.

But many in Berlusconi's party later had second thoughts about the move, which risked stirring Italy's economic problems anew.

"Italy is running a risk that could be fatal, without remedy. Thwarting this risk, to seize or not seize the moment, depends on the choices we will make in this chamber. It depends on a yes or a no," Letta told the Senate when asking for the confidence vote.

After one of his own senior party members, Angelino Alfano, signalled that the party would back the government, Berlusconi had no choice but to yield.

"Italy needs a government that can produce structural and institutional reforms. We have decided, not without internal strife, to back the confidence vote," Berlusconi said in his address to fellow senators.

Earlier this year, the 77-year old billionaire was convicted to four years in jail over fraudulent purchase of broadcasting rights by his Mediaset television empire.

His sentence was then reduced to one year, which he is most likely going to spend in house arrest given his age.

The more painful part of the verdict, upheld by the supreme court, is a five-year ban from public office.

A Senate committee will decide later this week on Berlusconi's expulsion from the upper chamber, which he labelled as "political assassination."

European Commission chief Jose Manuel Barroso said it was "very positive" that the Italian government stays on, as "political stability is vital for Italy."

He told journalists in Brussels that he spoke on the phone with Berlusconi, as well as Prime Minister Letta and President Napolitano.

"I believe it is my duty as a president of the commission to draw international attention to politicians on the consequences of the decisions they take on the national level for Europe," Barroso said.

Financial markets reacted positively to the news of Letta's survival, with shares on the Milan stock exchange going up 2 percent and government borrowing costs going down.

For his part, markets have grown accustomed to southern European political crises and tend to react more coolly in respect to the future of the eurozone, European Central Bank chief Mario Draghi has said.

"The eurozone has grown more resilient compared to a few years ago," he noted at a press conference in Paris on Wednesday when asked about Italy.

"The message markets are sending to every country is very simple: stability and reforms," Draghi noted, adding that the main pressure should come from within the country rather than markets.

Two years ago, then-ECB chief Jean-Claude Trichet had to send a letter to then Prime Minister Silvio Berlusconi to remind him of the reforms he had promised in return for help in lowering his country's borrowing costs.

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