Berlusconi Court Ruling Threatens Italian Coalition’s Stability

The former premier’s conservative lawmaker block parliamentary activity to protest a supreme court ruling.

Italian prime minister Silvio Berlusconi attends a European Council meeting in Brussels, October 26, 2011
Italian prime minister Silvio Berlusconi attends a European Council meeting in Brussels, October 26, 2011 (The Council of the European Union)

Silvio Berlusconi’s conservatives blocked parliamentary activity in Rome on Wednesday in protest to the supreme court’s decision to rule later this month on the former premier’s complicity in tax fraud at his media holding. Berlusconi’s lawyers hadn’t expected a ruling until later this year.

Although the septuagenarian Berlusconi will likely escape a prison sentence because of his age, he could be banned from public office for up to five years.

Lawmakers from Berlusconi’s Il Popolo della Libertà, who formed a coalition with Prime Minister Enrico Letta’s social democrats earlier this year after neither party secured a majority in parliamentary elections, accused the judges of bias. One threatened to blow up the coalition altogether if the left, which denounced the suspension of legislative activities as “irresponsible and unacceptable,” wouldn’t comply.

Letta’s Democratic Party has little choice but to give in, writes La Repubblica‘s Kay Wallace. While “its members cannot be seen to be supporting their old enemy against the court,” if they refuse the right’s demand, “the government of which they are a part will almost certainly fall.”

Attempting to ensure the conservatives’ loyalty, Letta once again promised to repeal a hated housing tax in a television interview. Berlusconi pledged its repeal during the campaign but the government hasn’t yet come up with the necessary €8 billion in savings to offset such a measure.

While former prime minister Mario Monti, who introduced the housing levy, managed to keep Italy’s deficit under the European Union’s 3 percent limit, borrowing in the first three quarters of this year was equivalent to 7.3 percent of economic output. Letta and his economy minister, former central bank official Fabrizio Saccomanni, have both vowed that they will meet this year’s 2.9 percent deficit target, however, which seems nigh impossible if the housing tax is abolished.

Italy’s economy, the third largest in the eurozone, contracted 2.4 percent through last year when unemployment rose to over 11 percent. Its public debt, equivalent to nearly 130 percent of gross domestic product, is among the highest in the developed world.

On Tuesday, the Standard and Poor’s rating agency further downgraded Italy’s creditworthiness which now hovers only a couple of notches above “junk” level.

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