Berlusconi Allies Clash With Letta’s Party on Senate Ouster Push

Silvio Berlusconi’s allies clashed with their partners in Italy’s governing coalition over the push to expel the three-time prime minister from the Senate. Italian stocks fell amid concern the turmoil could upset the government.

The ruling coalition failed to find common ground on a timetable for proceedings against Berlusconi, according to Mario Michele Giarrusso, a senator for the opposition who participated today in a closed-door meeting of 10 lawmakers called to set the agenda. While the process is scheduled to start on Sept. 9 in Rome, further meetings haven’t been placed on the calendar, Giarrusso told reporters.

Tension between the two biggest parties in Prime Minister Enrico Letta’s alliance threatens to topple the four-month-old administration. The two sides are divided about whether Berlusconi, who lost the final appeal of a tax-fraud conviction last month, deserves to be ousted from parliament. Senator Altero Matteoli, a Berlusconi ally, said today the government will fall if the expulsion is carried out, the Ansa news agency reported.

“He’s cornered now,” Federico Santi, an analyst with Eurasia Group, said of Berlusconi in an interview. Bringing down the government “would be a desperate move, last-ditch retaliation.”

The benchmark FTSE MIB slipped 1.3 percent to 16725.50 at 5:19 p.m. in Milan, compared with a gain of 0.2 percent in the broader Stoxx Europe 600 Index. Italian 10-year bond yields rose 7 basis points to 4.42 percent.

Services Shrink

The impact on markets was exacerbated by a report today showing the Italian services sector shrank last month more than economists had forecast. A services index, based on a survey of purchasing managers, rose to 48.8 from 48.7 in July, Markit Economics said. Economists in a Bloomberg News survey predicted an increase to 49.9.

The process against Berlusconi starts with the Sept. 9 meeting of the Senate’s parliamentary immunities committee, which will debate over multiple days about whether to put the matter before the upper house’s full chamber. Representatives of Letta’s Democratic Party pushed to schedule the second committee meeting on Sept. 10, while Berlusconi’s People of Liberty party sought more time, said Giarrusso of the Five Star Movement.

The second meeting will be set at the end of the Sept. 9 appointment, Senator Dario Stefano, chairman of the committee said today in a televised interview with SkyTG24.

Expulsion Required

Berlusconi, 76, is pushing Letta, 47, to persuade the coalition to oppose the impeachment. Lawmakers in the Democratic Party, the biggest force in parliament, have said expulsion is required under a 2012 anti-corruption law.

“The committee can’t operate under political pressure,” Senator Stefania Pezzopane, a Democratic Party member and vice chairman of the committee, told reporters in Rome today. “The committee must simply, honestly and seriously make sure that the law of the land is applied.”

People of Liberty, the second-biggest party in Letta’s alliance, claims the law is unconstitutional and shouldn’t be applied to the former premier, whose tax-fraud conviction dates to events in 2002 and 2003. The party is pushing for a Constitutional Court ruling on the matter.

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