Berlusconi’s Majority in Jeopardy as Italy Faces Key Austerity Votes

Prime Minister Silvio Berlusconi has denied reports that he is preparing to resign as he struggles to prove he can implement austerity measures pledged to European Union allies.

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Giuliano Ferrera, Berlusconi’s former spokesman and editor of newspaper Il Foglio, wrote today that the premier would step down “within hours,” a report that Berlusconi quickly denied in an interview with news agency Ansa. In a phone interview after his initial report, Ferrara said Berlusconi would likely resign next week in return for support in a vote on the austerity and economic-growth measures.

“It’s very urgent” for Italy to pass the measures, said Ferrara. “Berlusconi should ask for a confidence vote to do that and then he should step down and ask for elections.”

Berlusconi has been struggling to keep his allies in line after coalition lawmakers last week announced their defections ahead of key parliamentary votes in coming days. Berlusconi plans to stake the survival of his government in a confidence vote next week on the implementation of measures pledged to the EU that aim to boost growth and trim the nation’s debt, which is the second-largest in the euro zone.

Two members of Berlusconi’s party defected to the opposition last week, with a third following last night. Six others called for Berlusconi to resign in a letter to newspaper Corriere della Sera last week, in which they also called for a broader coalition. According to a Repubblica daily report on Sunday, more than a dozen others are ready to ditch the coalition.

“I fear we no longer have a majority in parliament,” said Interior Minister Roberto Maroni on a talk show Sunday. Maroni, a member of the Northern League majority party, said he backs early elections.

The defections put Berlusconi at risk of losing a vote tomorrow on the 2010 budget report. Parliament’s lower house, the Chamber of Deputies, failed to rubber-stamp the measure in an initial ballot last month, prompting Berlusconi to call for a confidence vote, which he narrowly won with 316 votes in the 630-seat body.

Berlusconi is facing mounting pressure both at home and abroad to show that he can jump start the economy while reining in spending in order to cut a debt load that is roughly 120% of the nation’s annual gross domestic product and larger than that of Greece, Spain, Portugal, and Ireland combined.

On top of the budget vote, which acts as a sort of confidence vote, opposition leaders are trying to muster backing for a no-confidence vote to try to topple Berlusconi. If he should fail to muster a majority in either type of confidence vote, the government would fall and President Giorgio Napolitano would then consult with political parties to see whether another majority could be formed.

Napolitano would also try build support for a so-called technical government, to be led by a prominent figure charged with implementing the economic reforms and then preparing the country for new elections. If Napolitano fails to forge a new government, elections would likely be called and held two months after the consultations end.

If Berlusconi wins the confidence vote next week, he will likely resign and push Napolitano to agree to elections in January rather than negotiate a new government, said Ferrara, who once ruled a technical administration.

Echoing a similar call by Greek leaders, Napolitano called for a unity government over the weekend, saying that Italy cannot be expected to mend itself “in a climate of war” and that it’s “indispensable” that all parties back the austerity and growth measures promised to the European Union.

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In August, Berlusconi’s government approved 45.5 billion euros in austerity measures in order to secure European Central Bank purchases of Italian debt after yields surged above 6%. Reaching the 7% level drove Greece, Ireland, and Portugal to seek bailouts, a move Berlusconi said last week was not necessary. If Italy fails to pass the reforms, the central bank is free to stop buying Italian bonds.