SCENARIOS-Berlusconi faces showdown over austerity

By Philip Pullella

ROME, July 6 (BestGrowthStock) – Personal setbacks, plummeting
polls, an unpopular austerity budget and bickering in his
coalition have left Italian Prime Minister Silvio Berlusconi
more vulnerable than he has been since he won election in 2008.

Berlusconi is to seek a confidence vote in the lower house
Chamber of Deputies for the 25-billion-euro austerity budget, in
a sign he has to whip his coalition into line. [ID:nLDE6641WG]

Here are scenarios for how the next few weeks could shape
up:

A PAINFUL, DIVISIVE AUSTERITY BUDGET

The government announced on July 5 it would seek a
confidence vote in the Chamber of Deputies to push through the
budget, which even the opposition says is needed to help get
Italy’s deficit in order and avoid a Greek-style crisis.

The deficit last year was at 5.3 percent of GDP and is
targeted at 5.0 percent of GDP this year.

But Berlusconi has been assailed from all sides, including
from within his coalition, on how the cuts have been meted out.
Workers say the budget bleeds them while sparing the rich. Local
authorities say they will not be able to provide proper health
and education services.

Berlusconi’s own centre-right parliamentarians, catering to
their constituents, have proposed some 1,250 amendments to make
the blow softer to local voters. Berlusconi says it needs to be
rammed through quickly “for the common good”.

Commentators say the confidence vote is an attempt to force
party dissenters to vote yes in a public ballot because if the
government loses, they will be responsible for its collapse. The
government will win the vote but the malaise will linger.

A SUMMER TRUCE

Although it is suffering from low opinion poll ratings and
the loss of two ministers tainted by corruption in as many
months, the government will almost certainly survive the summer,
although, as Berlusconi’s right-hand man Gianni Letta put it,
“the season is sizzling and not just because of the weather.”

What September will bring is not clear.

“Berlusconi is facing internal opposition which if not
defeated or safely corralled, could bring the government down,”
said James Walston, political science professor at the American
University of Rome.

A showdown is shaping up between Berlusconi and Gianfranco
Fini, the speaker of the lower house and co-founder with
Berlusconi of the People of Freedom coalition party.

Fini, who has often criticised a lack of freedom of speech
in the party, is opposed to Berlusconi’s attempt to rush through
a law that would limit the use of wiretaps by police and punish
media that publish them.

Commentators say a situation where the top two coalition
leaders avoid being in the same room and insult each other when
they are cannot go on much longer.

A LEAGUE APART

The other main component of the coalition, the Northern
League, is unhappy as the austerity budget will cut resources to
regions. One of the League’s battle cries has been the right to
have more say in how national taxes are spent locally for
services such as education and health.

“The Northern League does not want to bring home the grand
prize of federalism only to find they have no money to implement
it and have to raise regional taxes to maintain the same level
of services,” Walston said.

Berlusconi cannot forget that it was the League’s leader,
Umberto Bossi, who felled his first government in 1994.

NEW ALLIANCE?

Commentators say the smart and ambitious Fini, who controls
about 50 seats in parliament, may be quietly preparing a “Third
Way” that would pit his own alliance against whatever is left of
Berlusconi’s People of Freedom coalition and the leftist
opposition led by the ex-communist Democratic Party.

Analysts say Fini will wait for the right moment, when
Berlusconi is even weaker than he is now.

His alliance would include Fini loyalists, other disaffected
conservatives, a Catholic party headed by former house speaker
Pierferdinando Casini, a centrist movement headed by former Rome
mayor Francesco Rutelli and high-profile business leaders headed
by former FIAT president Luca Cordero di Montezemolo.
(Editing by Janet Lawrence)

SCENARIOS-Berlusconi faces showdown over austerity