Berlusconi threat to topple Monti sparks euro fears
A THREAT by former Italian premier Silvio Berlusconi's to bring down Italy's government has sent a deep shudder through the European political establishment.
Mr Berlusconi's shrill warning threatens not just Italy, but could rock already jittery markets in Europe should current Prime Minister Mario Monti be undermined. Brussels and Bonn are relying on Mr Monti to emerge as Italy's saviour.
Mr Berlusconi made the unexpected threat at the weekend, still evidently fuming from his conviction 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 Mr 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 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, Mr Berlusconi said the Monti government had "done much" and was going "generally" in the right direction.
The Monti government of non-elected technocrats would lose its majority and have to resign if most of Mr 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," said 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."
Mr Monti has pushed through tax hikes, spending cuts and a pension overhaul to cut public debt which is running at 126pc of gross domestic product, according to the International Monetary Fund.
Unemployment in Italy has risen to 10.7pc, its highest level since monthly records began in 2004, and unions are locked in disputes with companies over plant closures and layoffs
Fabrizio Cicchitto, leader of Mr 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.
The fact that Mr Cicchitto and other PDL leaders did not rush to second Berlusconi's suggestion of a government collapse spoke volumes about the rifts within the party, divided between hardcore Berlusconi supporters and moderates such as party secretary Angelino Alfano. The divisions mean the PDL is likely not to vote as a united bloc in a no-confidence vote.
"I don't think Berlusconi has the numbers to topple the Monti government but he does have the numbers to make life very difficult for the government," said Rosy Bindi, president of the centre-left Democratic Party.