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ROME: Former premier Silvio Berlusconi’s threat to bring down Italy’s government underscores deep divisions in his centre-right party ahead of next year’s elections and risks rattling markets which see Prime Minister Monti as Italy’s saviour.
Berlusconi made the unexpected threat on Saturday, still fuming from his conviction 24 hours earlier on charges of tax fraud and a jail sentence of four years which he will not have to serve until all appeals are exhausted. In a hastily called news conference he attacked the magistrates who convicted him as part of a caste of leftist “dictators” a vitriolic charge he has levelled many times before.
But then he trained his sights on Prime Minister Mario Monti’s economic policies.
“We have to recognise the fact that the initiative of this government is a continuation of a spiral of recession for our economy. Together with my collaborators we will decide in the next few days whether it is better to immediately withdraw our confidence in this government or keep it, given the elections that are scheduled,” he said.
Only three days earlier, when he announced he would not be a candidate for prime minister in next April’s elections, Berlusconi said the Monti government had “done much” and was going “generally” in the right direction.
The Monti government of non-elected technocrats is supported by the centre-left, the centre-right and the centre. It would lose its majority and have to resign if most of Berlusconi’s PDL party withdrew support.
The possibility of a government collapse before elections scheduled for next April spooked financial and political commentators, who worried about market reaction.
“The damage would be enormous,” Stefano Folli, editor of Italy’s leading financial daily, Il Sole 24 Ore. “Damage in terms of political neurosis, international anxiety, threats to the stability law (the annual budget), and a general discrediting.”
Monti has pushed through painful tax hikes, spending cuts and a pension overhaul to cut public debt which is running at 126 percent of gross domestic product, according to the International Monetary Fund. Unemployment in Italy has risen to 10.7 percent, its highest level since monthly records began in 2004.
Fabrizio Cicchitto, leader of Berlusconi’s PDL party in the lower house of parliament, was cool to the idea of a government crisis, saying instead that the country had to avoid “an explosion” of the spread between German and Italian bonds.