Italian Prime Minister Mario Monti said he consulted President Giorgio Napolitano about the future of his government after former Prime Minister Silvio Berlusconi threatened to withdraw his parliamentary backing.
“I have been in touch with the president of the republic and I am awaiting his valuation,” Monti told reporters after a six-hour Cabinet meeting in Rome.
His government is hanging in the balance after Berlusconi’s People of Liberty party today said it passed from supporting the government to “a position of abstention,” according to the PDL’s Senate whip, Maurizio Gasparri. The shift came before a confidence vote in the Senate that prompted Monti to travel from his office to the chamber to cast a ballot.
The yield on Italy’s benchmark 10-year bond rose 13 basis points to 4.57 percent, the biggest one-day gain since Sept. 10 and widening the difference with comparable German bunds by 18 basis points to 328 basis points. Italy’s benchmark FTSE MIB stock index declined 0.8 percent as equities across Europe rose.
The challenge by Berlusconi’s party less than a day after after the billionaire media magnate criticized the government and said he may run in the general elections, which must be held by May. Napolitano called on lawmakers to avoid a rift with the government and assured people outside of Italy that his country could handle the political upheaval.
“These are pre-electoral tensions that even outside of Italy can be understood without sounding alarms on the institutional soundness of our country,” Napolitano said in a speech today. “This soundness is beyond question. I must publicly reiterate it and I feel up to the task.”
Berlusconi, 76, is cultivating an anti-austerity message to contrast with Monti before the general election. Still, the differences between the two extend beyond policy. Berlusconi, who was sentenced in October to four years in prison for tax fraud, staged his challenge just as Monti’s Cabinet was passing a plan to ban lawmakers convicted of crimes from serving in parliament.
The People of Liberty party “is trying to hold the majority in check,” said Raffaele De Mucci, a professor of politics at the Luiss University in Rome. “Their pawns to trade are clearly the election date, the electoral law and the parliamentary convict ban.”
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