Italy's Berlusconi fights for political life

Italian Premier Silvio Berlusconi appealed for his political survival Thursday, telling parliament that his government is the only credible alternative to help guide the country through the growing sovereign debt crisis.

Government faces Friday confidence vote

Italian Premier Silvio Berlusconi delivers his speech in the Lower Chamber in Rome on Thursday. At right are the empty seats after the oppositions decided not to attend the session. (Andrew Medichini/Associated Press)

Italian Premier Silvio Berlusconi appealed for his political survival Thursday, telling parliament that his government is the only credible alternative to help guide the country through the growing sovereign debt crisis.

Berlusconi's 3 1/2-year-old government faces a confidence vote Friday that will test if the premier retains a majority in Parliament. If the vote fails, Berlusconi must step down.

The crisis was provoked when lawmakers this week blocked routine legislation, which prompted opposition lawmakers to demand his immediate resignation and the country's ceremonial president to urge the Italian leader to prove his government's mettle.

Berlusconi made clear in his 15-minute address that he has no intention of stepping down — and that if he loses the only alternative is new elections, not a technical government as some have proposed.

"The governments asks for a confirmation of confidence because it is deeply aware of the risks facing the country and because the deadlines imposed by the markets are not compatible with those of certain political rituals," Berlusconi said.

Berlusconi has steadfastly resisted calls for new elections as his leadership has been weakened by personal scandals, trials and Italy's increasingly precarious financial position. Three ratings agencies have downgraded Italy's public debt, one of the highest in the eurozone nearing 120 per cent of gross domestic product, citing political gridlock as a key reason.

Opposition leader Pierluigi Bersani said surviving a confidence vote, however, is not the same as governing a country.

"The government is not coping with the situation. The problems have all been laid out, but he only knows how to stay nailed to his seat by using tricks," Bersani said.

Berlusconi's coalition partner, the Northern League, has indicated only grudging support for the leader, saying publicly that it is not sure Berlusconi will complete his mandate in 2013.

Crucial moment

The confidence vote comes at a crucial moment for Italy, which is under pressure to come up with growth-promoting measures to avert being dragged into the widening sovereign debt crisis.

Addressing lawmakers, Berlusconi argued that only a democratically elected government enjoyed the support to make the painful but necessary decisions to stabilize Italy's finances. The opposition mostly boycotted the premier's appearance, leaving half of the seats in Parliament empty. But he was flanked by Northern League leader Umberto Bossi and Foreign Minister Franco Frattini and was frequently interrupted by applause in a show of unity.

Should he lose, Berlusconi said voters must decide a new government, adding that a technical government would not have "the strength of a legitimate government like this in the face of the difficult decisions posed by this crisis."

Ironically, the vote of confidence was forced when the lower house failed to approve the 2010 government accounts by a single vote. Finance Minister Giulio Tremonti missed the vote by 30 seconds, failing to cast what would have been the decisive vote.

On Wednesday, Central Bank chief Mario Draghi, who takes over the helm of the European Central Bank on Nov. 1, urged the government to act more quickly to implement reforms that can spur growth — beyond the austerity package that put Italy on the path to balance its budget by 2013.

Otherwise, Draghi warned that the rising cost of borrowing to service national debt seen over the last three months will eat up "no small part" of the austerity package approved by Parliament last month. The package of €54 billion ($75.77 billion Cdn) in tax increases and spending cuts aims to balance Italy's budget by 2013.

"The goal of relaunching growth is finally largely shared, but the adoption of the measures necessary so far have banged up against apparently insurmountable difficulties," Draghi said.

Italian yields on medium- and long-term bonds dropped Thursday as Italy easily raised €6.2 billion ($8.7 billion Cdn). Italian borrowing costs have been increasing since July, although the European Central Bank's program of buying up peripheral bonds has briefly helped stanch the rise.