Berlusconi Meets Letta as Sex Ruling Rattles Government

Silvio Berlusconi, the three-time premier who was convicted yesterday of paying a minor for sex, is set to meet Italian Prime Minister Enrico Letta, underscoring his influence over the two-month-old coalition.

Today’s encounter in Rome, the last of Letta’s three meetings with party leaders this week, will test his ability to impose his policy agenda and curtail political bickering.

“Letta’s going to have to fight very hard to keep his boat on course,” said James Walston, a professor at the American University in Rome. The verdict “makes the Berlusconi supporters all the more hyped up and angry, and they’re going to be a lot tougher on completely irrelevant issues.”

Letta’s push to forge consensus on tax breaks and spending cuts, his remedy to end recession and reassure Italy’s European Union partners, was set back yesterday with the Berlusconi verdict. Berlusconi’s allies in parliament pledged to fight the conviction, which the 76-year-old billionaire rejected a political vendetta, and stepped up policy demands.

A value-added tax increase being weighed by Letta was the object of an ultimatum by Renato Brunetta, chief whip of Berlusconi’s People of Liberty party in the lower house, Ansa reported, citing an interview with Radio Anch’io. Brunetta said he would bring down Letta if a planned VAT increase, scheduled to take effect on July 1, wasn’t postponed until at least the end of the year, Ansa reported.

Berlusconi was convicted by Milan court of paying a minor for sex and abusing the power of his office, Judge Giulia Turri said yesterday. The decision carries a seven-year prison sentence and lifetime ban from public office. Neither punishment will be enforced until all appeals are exhausted. Berlusconi may be spared jail, if the verdicts are ultimately upheld, due to his advanced age.

Bonds Gain

Italian 10-year bond yields fell 2 basis points to 4.82 percent at 1:04 p.m. in Rome after rising to a three-and-a-half month high yesterday. Shares in Mediaset SpA, the broadcasting company founded and controlled by Berlusconi, rose 4.7 percent to 2.50 euros ($3.28). Milan-based Mediaset fell 5.3 percent yesterday.

Letta has already met with Guglielmo Epifani, head of the Democratic Party, the biggest force in the coalition, and Former Prime Minister Mario Monti, whose Civic Choice also supports the government.

The verdict occupied the front sections of Italy’s main newspapers, with most, including La Repubblica and Corriere Della Sera, saying the sentence was tougher than expected. Emilio Fede, a former anchor at one of Mediaset’s television stations, said in an interview with Repubblica that the live broadcast of the sentence “brought tears to my eyes.” Il Giornale, a newspaper owned by Berlusconi’s brother, ran a banner headline “Butchery.”