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Dissidents quit Berlusconi government

November 15, 2010

by Guy Dinmore in Rome, published: November 15 2010 

The disintegration of Silvio Berlusconi’s centre-right coalition government has moved a step closer with the resignation of four senior officials loyal to leading dissident Gianfranco Fini – a move likely to lead to early general elections.

Andrea Ronchi, minister for European affairs, together with Adolfo Urso, deputy industries minister, and two under-secretaries – once jokingly dismissed by Mr Berlusconi as the “four cats” – sent their letters of resignation on Monday morning.

The resignation of the four officials, members of Mr Fini’s new Future and Liberty party, completes a process that began in July when the prime minister’s People of Liberty party expelled Mr Fini, a long-time ally, and some of his supporters for dissent.

“The treachery is consummated,” said Maurizio Sacconi, welfare minister and Berlusconi loyalist, commenting on the resignations.

Opposition politicians renewed their calls for Mr Berlusconi, 74, to step down, making capital out of the latest scandal surrounding the prime minister’s controversial private life involving a teenage Moroccan disco dancer.

Mr Berlusconi, midway through his five-year term, has said he will only quit should he lose votes of confidence that he wants to table in the senate and lower house. Italy’s parties are broadly agreed that a final showdown in parliament should only follow the passing of the 2011 budget which starts its passage in the lower house on Tuesday and should complete its approval in the senate by mid-December.

Mr Fini’s 37 deputies probably have sufficient votes to bring down the government in the lower house. In the senate Mr Berlusconi still holds a slim majority.

With one month to play for, Mr Berlusconi is expected to try to win over small numbers of wavering deputies. Alternatively he might try to broaden his coalition to include the centrist UDC party, but this is opposed by the right wing Northern League whose continued support for the government is also vital.

Opinion polls indicate an election early next year would be tightly contested. Thanks in part to the electoral law that sets different parameters for the two chambers, polls suggest Mr Berlusconi might win a majority in the lower house but not the senate.

Goldman Sachs, in a report by Natacha Valla, its chief Italy economist, noted that early elections were likely. She said the 2011 budget contains a €5.7bn “softening” relative to the initial draft but that “fiscal consolidation remains overall in safe waters for 2011” despite the political instability.

The yield premium for Italian 10-year bonds over German bonds rose to a record 180.9 basis points on November 11 as markets responded to concerns that Ireland and Portugal might follow Greece in needing a European Union-led bail-out. Still, Italy held a successful auction of treasury bonds on Friday and spreads eased to 159 basis points by early Monday.

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