Beleaguered Berlusconi hangs on for now Friday, 09 September 2011 02:23

By James Mackenzie and Francesca Landini

Italian Prime Minister Silvio Berlusconi’s parliamentary majority should allow him to see off the growing army of critics who want to see him gone, leaving his struggling government hanging on, at least for the moment.

The premier, who turns 75 later this month, is in a corner facing scandal, mass street protests, unruly coalition partners, an increasingly disillusioned business establishment and, worst of all, a hostile bond market.

Having entered politics in 1994 pledging to transform Italy with the business acumen he used to build his vast media empire, he now depends on the European Central Bank to buy Italian bonds to stop a 1.9 trillion euro debt pile sliding out of control.

Italy’s borrowing costs, once almost as low as Germany’s, have shot higher over worries about Rome’s ability to control its public finances, demolishing the government’s boast of having shielded Italians from the euro zone debt crisis.

The coalition with his Northern League partners has been shaken by infighting over tax and pension measures and he has been in open conflict with his Economy Minister Giulio Tremonti.

At the same time, Italy’s sclerotic economy has squeezed ordinary Italians ever more tightly and public anger over austerity measures many judge to be unfair brought hundreds of thousands of protestors to the streets on Tuesday.

Opinion polls put Berlusconi’s approval ratings in the low 20 percent range, European partners have heaped scorn on his centre-right government’s handling of the crisis and the ECB has said it will not keep supporting Italy indefinitely.

The premier should be down and out but the centre-left opposition has struggled to establish itself as a cohesive political force and make capital from either the government’s floundering record or Berlusconi’s multiple personal scandals.

As Wednesday night’s comfortable victory in a Senate confidence vote on the austerity measures underlined, the government has the numbers to survive, at least for the moment.

“It’s a very serious situation,” said Renato Mannheimer, one of Italy’s leading pollsters, whose regular survey in the Corriere della Sera newspaper this week showed 8 out of 10 Italians opposed to the government and a similar number critical of the centre-left opposition.

“There’s one scandalous episode after another, there’s the economic crisis, we’re being observed very critically by the world at large and there’s generalised distrust of the political class,” he said.

“But as long as Berlusconi can hold his majority together in parliament, the situation remains, unless there is some outside shock from the bond markets or something similar,” he said.

That does not mean the increasingly tense coalition between the People of Freedom (PDL), a party built entirely around Berlusconi, and the pro-devolution Northern League will get much done. Few believe it will survive until elections scheduled in 2013.

Berlusconi is no longer the undisputed master of Italian politics and business and newspapers speculate daily about the prospect of his replacement by a technical government of experts or a temporary cross-party administration that could push through tough reform.

His coalition’s chaotic handling of the austerity plan has caused deep alarm among the tightly interwoven business and political establishment whose support has traditionally been needed for Italian governments of all colours to survive. “We talked a lot about a government of technocrats or a ‘wide-majority government’,” said one senior banker who attended last weekend’s Ambrosetti forum, the annual gathering of Italy’s business elite at Cernobbio on the shores of Lake Como.

“We need a government that is able to react quickly but...a government which has the support of parliament can’t be replaced,” he said. The wrangling over austerity measures to bring Italy’s creaking public finances under control has nonetheless shown how deeply divided the coalition has become and how far Berlusconi’s own power to enforce agreement in cabinet has weakened.

REUTERS