Fini, Berlusconi May Reconcile Before Key Vote, Menia Says

Italian Prime Minister Silvio Berlusconi may secure a truce with former ally Gianfranco Fini before confidence votes in parliament next month that threaten to bring down his government with two years left in its term.

“Berlusconi and Fini need to find common rather than dividing points,” Roberto Menia, one of the Fini allies who resigned from Berlusconi’s government on Nov. 15, said today in an interview on Canale 5 television. “A new unity can be found on the economic situation, there is no doubt about it.”

Menia’s comments came hours after Fini released a video calling on his supporters to show “maximum responsibility,” prompting speculation that his position on toppling the government may be shifting. Fini, a co-founder of the ruling People of Freedom Party, first broke with the premier in July. He called for Berlusconi to quit on Nov. 7 and the resignation of his four members of the government this week led to the scheduling of the confidence votes for Dec. 14. Fini’s new party has enough votes in parliament to bring down the government.

“It looks like some of Fini’s group don’t want to follow their leader and within the party there is a fracture, which may have implications for Fini himself,” said Roberto D’Alimonte, a professor of politics at Luiss University in Rome. “If this is confirmed, the government crisis will be over before it really begins, but in Italian politics you always need to use question marks.”

Photographer: Alessandra Benedetti/Bloomberg

Italian Prime Minister Silvio Berlusconi. Close

Italian Prime Minister Silvio Berlusconi.

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Photographer: Alessandra Benedetti/Bloomberg

Italian Prime Minister Silvio Berlusconi.

Defections

Giuseppe Angeli, a deputy who joined in Fini’s defection in July, announced on Nov. 16 that he would return to the Berlusconi group. Defense Minister Ignazio La Russa said on Nov. 17 he had received calls from three other Fini backers who said they won’t vote against Berlusconi next month.

Berlusconi has criticized Fini for provoking the possible fall of the government at a time when the spread of the European debt crisis is already shaking investor confidence in the bonds of high-debt nations such as Italy. The premium investors demand to hold 10-year Italian bonds over comparable German bunds rose 2 basis points today to 160.3 basis points after reaching a euro-era high of 190 basis points on Nov. 12.

“I’m launching an appeal to ask for maximum responsibility, first of all from those that have had the honor and duty of governing,” Fini, who is also the speaker of the parliament’s lower house, said in a video message posted late last night on the website of his new Future and Liberty for Italy party. “In the next few days we’ll see what happens,” he said without elaborating.

Budget Passage

All the major political parties have said they are committed to passing the Italian budget plan for next year before voting on the fate of the government. The Chamber of Deputies today passed the budget bill, which includes cuts totaling 11.6 billion euros ($16 billion) to trim the deficit to 5 percent of gross domestic product. The Senate will begin its review next week, and the leaders of both houses of parliament agreed to complete final passage of the plan by Dec. 10.

On Nov. 17, Berlusconi vowed to survive next month’s confidence vote to ensure political stability and calm investors’ concerns that the fall of the government could disrupt deficit-reduction efforts. He added he was “keeping a low profile” out of “concern to avoid government instability, given the amount of bonds that we have to place on national and international markets.”

Italy’s debt at 116 percent of gross domestic product is the second largest after Greece by that measure. Italy also sells more debt than the other peripheral countries. The Treasury next auction bills on Nov. 25, sells bonds on Nov. 29 and has two bill and bond auction scheduled for December.

The euro region’s third-biggest economy is unlikely to expand more than 1 percent this year and next as the recovery from the worst recession since World War II slows more than forecast, employers’ lobby Confindustria said on Nov. 17. Italy may miss its goal of cutting the budget deficit to below 3 percent of GDP in 2012 if growth proves weaker than the government’s projected 1.2 percent this year and 1.3 percent next, the Organization for Economic Cooperation and Development said in a report yesterday.

To contact the reporter on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net

To contact the editors responsible for this story: John Fraher at jfraher@bloomberg.net

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