Berlusconi Adds to Italy Turmoil With Signal He’d Step Aside

Berlusconi Offers to Withdraw His Candidacy If Monti Runs
Former Prime Minister Silvio Berlusconi offered to drop his plans to run for premier on the condition that Italian Premier Mario Monti agrees to enter the election campaign and lead a coalition of “moderates.” Photographer: Filippo Monteforte/AFP via Getty Images

Former Prime Minister Silvio Berlusconi threw his week-old political comeback into doubt, signaling he’d yield if Premier Mario Monti agrees to enter the election campaign as part of a coalition of “moderates.”

“If Monti decides to accept the request of the whole moderate bloc” and seek the premiership, “I would not have any problem in withdrawing my bid to be prime minister and could accept to be the coordinator of the coalition,” he told reporters in Rome late yesterday.

Berlusconi’s remarks came a day after the Northern League party, his coalition partner in all three of his governments, said it wouldn’t support his latest candidacy. Berlusconi’s party had less than 20 percent support in a poll released yesterday. The euro jumped following his comments.

“Berlusconi is in a corner,” said Roberto D’Alimonte, a professor of politics at Luiss University in Rome. “At this point, anything can happen, including that he won’t run at all and that his party eventually implodes. In any case, if he decides to run in these circumstances, he would lose badly.”

Berlusconi’s announcement came six days after his party withdrew its support for Monti’s government. That decision prompted Monti to announce his plan to resign, sending Italian bond yields soaring and sparking a backlash from Berlusconi’s critics and even some of his own supporters and allies.

Bond Yield

Italy’s 10-year bond yield fell 1 basis point to 4.63 percent, taking back a bit of the 29-point advance on Dec. 10, the first day of trading after Monti announced he planned to step down when Berlusconi’s forces deserted.

Investors did back Italian debt at an auction today when the Treasury sold 3.5 billion euros ($4.6 billion) of three-year bonds at 2.5 percent, the lowest rate at an auction in more than two years.

Berlusconi’s challenge may add pressure on Monti, 69, to enter the race. There is already a group of parties running on pro-Monti platforms and encouraging the premier, who heads an unelected government of non-politicians, to seek another term.

A poll by Ispo Ricerche showed Berlusconi’s People of Liberty party with 16.3 percent, with the Union of Centrists, Future and Freedom for Italy and Toward the Third Republic -- the three parties backing Monti -- at a combined 8.8 percent. That would give Berlusconi’s hypothetical coalition of moderates 25.1 percent, making it the second-biggest bloc after the coalition led by the Democratic Party which had more than 40 percent, according to Ispo.

Democratic Party

Pier Luigi Bersani, head of the Democratic Party, is also making overtures to Monti.

“I have told Monti that he must continue to have a role,” Bersani said at a press conference in Rome today. “The day after the elections, if I win, I will consider together with Monti” what he might do.

Berlusconi’s maneuver may be a way of pressuring the Northern League to return to his fold, D’Alimonte said. Berlusconi said that he would make sure that League-run regional governments in Piedmont and Veneto would fall if the party didn’t agree to join his efforts.

The three-time premier said Dec. 11 that Monti’s German-centric policies had left Italy worse off than when he stepped down 13 months ago. German Finance Minister Wolfgang Schaeuble responded to the remarks yesterday.

“Italy will have elections and in general we don’t interfere with the internal policies of member states,” Schaeuble said in Brussels. “But everybody knows that Italy has made great progress under Monti that didn’t happen under his predecessors in the years before.”

Meeting Merkel

Berlusconi may meet German Chancellor Angela Merkel today in Brussels as the two are due to attend a meeting of the European People’s Party.

Berlusconi has said that the widening difference between Italian and German borrowing costs, which reached a record 575 basis points in the week before he resigned, was a “scam” and that “it wasn’t important.”

Berlusconi also yesterday blamed the surge in the Italian-German spread in June of last year on Germany.

“I know for sure that Germany through the Bundesbank asked all German banks to sell Italian government bonds,” he said. “I know this for sure because there was an Italian bank there that was told that if it refused to obey the order to sell the bonds it would have its banking license withdrawn.”

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