Berlusconi Renews Pact With League, Putting Senate in Play

Former Italian Prime Minister Silvio Berlusconi renewed his campaign partnership with the Northern League party, strengthening his chances in the Senate and pressuring his chief rivals to forge an alliance of their own.

Berlusconi’s People of Liberty party reached an agreement with the League to run together in February elections, he said today on RTL radio. While the coalition’s campaign will be led by Berlusconi, the premiership would be determined after the vote, he said. Berlusconi, 76, agreed not to be premier if he wins, Northern League General Secretary Roberto Maroni said separately in Milan.

Berlusconi’s ability to reassemble a portion of his former coalition increases his chances to win a blocking minority in the upper house of parliament. Berlusconi’s main rival, Pier Luigi Bersani of the center-left Democratic Party, may need to build an alliance with the political forces backing Prime Minister Mario Monti in order to secure the Senate.

“The immediate consequence of the pact is that Monti’s negotiation power vis-a-vis the center-left has increased very dramatically,” said Silvio Peruzzo, an economist at Nomura International Plc in London. “It will certainly accelerate the dialog” between Bersani and Monti’s group of so-called political centrists, Peruzzo said.

Italy’s 10-year bond yield rose 7 basis points to 4.33 percent, the biggest one-day rise in a month.

Broadening Coalition

Bersani, 61, may need to broaden his coalition from labor unions, which form the base of the Democratic Party’s support, to the liberal market forces that Monti, 69, represents. Bersani risks alienating supporters including the CGIL, Italy’s biggest union, and Puglia Governor Nichi Vendola if he seeks to draw his policies closer to those of Monti and his backers.

Berlusconi, the most successful Italian politician of the last two decades, is seeking a comeback 14 months after Europe’s sovereign debt crisis pushed him from power and splintered his parliamentary support. People of Liberty, or PDL, and its long- time ally have been at odds since November 2011, when Berlusconi backed Monti and the Northern League went into opposition.

Berlusconi told RTL he would consider taking the position of finance minister if his coalition wins the election. If Berlusconi wins the election, he said PDL General Secretary Angelino Alfano may become prime minister. Maroni, who spoke at a press conference televised by Sky TG24, said he would push for Giulio Tremonti, who served as finance minister under Berlusconi.

Premier Powerless

“In Italy, the prime minister has no real power beyond setting the agenda for cabinet meetings,” Berlusconi said on RTL. “The position that seems to me would allow me to take advantage of all my experience would be finance minister, which would allow me to demonstrate once again that I have no political ambitions.”

Berlusconi eased the reconciliation with the Northern League, a former separatist movement that seeks more autonomy for regional governments, by criticizing Monti over the last two months. Berlusconi hasn’t been able to reconstruct the full alliance he once led because Pier Ferdinando Casini, a Christian Democrat, and Chamber of Deputies Speaker Gianfranco Fini, who had backed Berlusconi in the past, are now the main supporters of Monti’s centrist movement.

Media Blitz

Berlusconi and Monti sparred over the weekend in a media blitz. Berlusconi, who has disowned his previous support for Monti’s so-called technocratic government of professors and bureaucrats, criticized the administration’s economic policy and its unpopular property tax.

“The technocrats have hurt the country,” Berlusconi said on RTL. “After a year of government there is not even one positive economic indicator.”

The criticism of Monti may be helping Berlusconi in the polls. The PDL along with the Northern League, and some smaller parties would win 28.8 percent of the vote if elections were held today, according to a poll by Tecne for SKY TG24. That’s more than twice the 14.3 percent for Monti and his allies, the poll said.

The Democratic Party and its allies led in the poll with support of 40 percent. That may be enough to ensure a victory in the Chamber of Deputies, though that alliance could fall short in the Senate, where Italy’s election law favors regional parties like the League. Berlusconi’s alliance with the League could strengthen their showing in the upper house and deny Bersani a majority, potentially leading to a hung parliament.

Berlusconi vowed today to slash the cost of politics. All candidates in Berlusconi’s group will be required to sign a pledge to vote for laws that would cut the number of lawmakers and each of their compensations in half.

Under the new alliance, Berlusconi agreed to back Northern League leader Roberto Maroni as the candidate to head the regional government of Lombardy, where Milan is located.

To contact the reporter on this story: Andrew Frye in Rome at afrye@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net

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