ON THE eve of today’s G20 summit in Cannes, the government of Italian prime minister Silvio Berlusconi was last night looking shaky, having been undermined by reports suggesting that as many as 11 members of his People Of Freedom party have signed a document calling on him to step down.
Even as reports of the possible “putsch” abounded, the Berlusconi cabinet was holding a difficult meeting late last night, which was marred by bitter disagreements over what measures would be enacted to honour promises made to its EU partners at last week’s summit in Brussels.
It is believed that the cabinet failed to agree on aspects of the controversial proposals such as a compulsory levy on private bank accounts, a measure to make it easier to lay off employees and institute pension reform.
A decree – held up for months by government infighting – was due to be issued incorporating elements of the reform measures. It would become law as soon as it was signed by the president, Giorgio Napolitano. It would also require the approval of parliament, where Mr Berlusconi has a thin majority. An amended Bill was also expected to be introduced along with a new Bill which would also have to be approved by parliament.
Although markets gave Italy a slight reprieve, with yields on its 10-year bonds easing to about 6.1 per cent after spiking on Tuesday, Mr Berlusconi was under intense pressure to act quickly or resign and make way for an interim government of national unity.
Mr Napolitano fuelled expectations of a change in government by releasing a statement saying he was looking at the degree of support for reforms from outside the ruling coalition. Opposition parties have told the president they would back an interim government of technocrats, possibly headed by Mario Monti, a former European commissioner.
But Mr Berlusconi has refused to quit and Mr Napolitano does not have the power to remove him unless the government loses a key parliamentary vote.
Speculation that the cabinet would also pass emergency measures to cut Italy’s €1,900 billion ($2,610billion) public debt spread alarm among analysts and business leaders, who fear hurried action will unnerve investors and infect Italy with the “Greek syndrome” of a contracting economy.Emma Marcegaglia, head of the Confindustria business lobby, warned Mr Berlusconi of “creating panic” by imposing an overnight tax on bank deposits, as happened in 1992. But she signalled support for a wealth tax or the reintroduction of a property levy, with the proceeds to be used for reducing the tax burden on enterprises. – (The Financial Times Ltd)
