Just five months after taking office amid Italy’s worst economic crisis in decades, prime minister Enrico Letta must tomorrow seek a vote of confidence in parliament. If he fails to win a majority, Italy will not only be plunged into a fresh round of political uncertainty and early elections where the outcome is highly unpredictable but will almost certainly face a steep rise in the cost of borrowing on international markets. If investors’ jitters over Italy return, the impact will be felt beyond the country’s borders and throughout the euro zone as a whole, where the economic recovery remains fragile.
The source of the latest turmoil is former prime minister Silvio Berlusconi, now 77 and a convicted tax cheat, who on Saturday ordered his five ministers in Mr Letta’s government to resign. The ostensible reason for the coalition breach was the cabinet’s decision not to block a scheduled increase in sales tax. Mr Berlusconi’s real motivation, however, has much to do with a vote this week in Italy’s senate that could see him expelled from the body on account of his recent conviction. Angered by Mr Letta’s failure to offer him support in the senate, Mr Berlusconi has characteristically put his own interests ahead of his country’s, seeking to pull the plug on a government charged with the Herculean task of restoring economic growth while reforming Italy’s economy, imposing fiscal discipline and reassuring markets about Italy’s creditworthiness.
The tycoon-cum-politician may have overplayed his hand, however, and some of the leading figures in his People of Liberty party, including some of those ministers who resigned on his instructions, are threatening to break from him if he does not change course. Mr Berlusconi’s calculation has been that fresh elections would boost his party, which he is rebranding as Forza Italia (the banner under which he first won power in 1994) offering him a better chance of seeing off the threat to his own political future. It is to be hoped that tomorrow’s vote will confound his ambitions.