Berlusconi wins vote but his majority shrinks amid calls for resignation to calm markets

11/8/2011

ROME — Italy's Premier Silvio Berlusconi won a much-watched vote in parliament Tuesday but failed to get enough support to stay in power much longer, as pressure built for him to resign to calm markets roiled by the European debt crisis.

Berlusconi has refused so far to heed calls — both from the opposition and his own allies — to step down. But he reportedly told deputies that he needs to "reflect" on the vote tally, admitting finally he had a "problem" with a majority in the Chamber of Deputies.

Berlusconi's government is under intense pressure to enact quick reforms to shore up Italy's defenses against Europe's raging debt crisis. However, a weak coalition and doubts over Berlusconi's leadership have ignited market fears of a looming Italian financial disaster that could bring down the 17-nation eurozone and shock the global economy.

Tuesday's vote, on a routine measure to approve the 2010 state books, garnered 308 votes of approval and none against in the Chamber of Deputies. But 321 deputies abstained from voting — most from the opposition center-left — a tactic that laid bare Berlusconi's shrinking hold on parliament.

Berlusconi's margin was eight shy of the 316 votes he needs to claim an overall majority in the 630-member chamber. Next week, the government has planned a vote on economic reforms demanded by the European Union. But if Berlusconi cannot count on an outright majority, that could spell deep trouble.

Berlusconi scrutinized the tally after the vote, apparently trying to figure out who had abstained, and later huddled at his office with his top adviser.

"This government does not have the majority!" thundered opposition leader Pierluigi Bersani after the vote. "If you have a crumb of sense in front of Italy, give your resignation."

He urged Berlusconi to speak with President Giorgio Napolitano, who as head of state must decide whether to tap another leader to try to form a new government or dissolve parliament and call early elections.

Ahead of the vote, even Berlusconi's top ally Umberto Bossi of the Northern League urged the premier to step down.

"We asked him to step aside, take a step to the side," said Bossi, the volatile ally who brought down Berlusconi's first conservative government in 1994.

Bossi said the man Berlusconi has already picked as his successor, former Justice Minister Angelino Alfano, should now lead the government.

Italy is the eurozone's third-largest economy, with debts of around €1.9 trillion ($2.6 trillion). Representing 17 percent of the eurozone's gross domestic product, it is considered too big for Europe to bail out like Greece, Portugal and Ireland already have been.

Even worse, a substantial part of Italy's debt needs to be rolled over in the next few years — the nation needs to raise €300 billion ($412 billion) in 2012 alone — just as interest rates for it to borrow have been soaring.

Italy's borrowing rates spiked Tuesday to their highest level since the euro was established in 1999. By late afternoon, the yield on Italy's ten-year bonds was up 0.15 percentage point at 6.68 percent, down from an earlier high of 6.74 percent.

A rate of over 7 percent is considered unsustainable and proved to be the trigger point that forced Greece, Portugal and Ireland into accepting financial bailouts.