Italian Prime Minister Silvio Berlusconi, bowing to a parliamentary revolt and intense market pressure, said he would resign once crucial reforms aimed at calming eurozone turmoil are adopted this month. Markets in Asia rallied and Italian borrowing costs fell, on hopes that the eurozone debt crisis already ravaging Greece might yet bypass Italy if the bloc’s third-largest economy gets serious about reform under new leadership. “After the adoption of the stability law, which will contain all the requests made by the eurozone, I will resign,” Berlusconi told the Canale 5 network, which is part of the colourful tycoon’s media empire.
Berlusconi said that after his resignation he expected President Giorgio Napolitano to dissolve parliament and call early elections. But other options include a unity government headed by a non-partisan technocrat. Berlusconi, who has survived numerous scandals during his two decades atop Italy’s volatile political scene, appeared shocked at the result in parliament of a procedural vote on budgetary legislation. The premier’s majority was wiped out by several defections from the ranks of his ruling People of Freedom party, leaving him fatally exposed if the opposition went ahead with a threatened vote of confidence.
The combination of Italy’s low growth rate and 1.9 trillion euro ($2.6 trillion) debt mountain has triggered investor alarm that the country could be the next victim of Europe’s debt crisis. Berlusconi’s popularity rating has slumped to a record low of 22 percent amid the current crisis and he is currently a defendant in three trials for bribery, tax fraud, abuse of power and paying for sex with a 17-year-old girl.
The officials form part of a humiliating special surveillance mechanism from the European Union and the International Monetary Fund that Berlusconi agreed to at the G20 summit in France this month to reassure investors. Berlusconi had promised his fellow eurozone leaders to overhaul Italy’s pensions system and accelerate sales of state assets, but the reforms had stalled to the intense frustration of Germany and others. Berlusconi had long dismissed warnings from the EU and his critics at home about Rome’s ailing finances, but with his third term as premier winding up, he admitted it was time to “show the markets that we are serious”.
