Italian Prime Minister Silvio Berlusconi’s government won a reprieve to stay in power and possibly avoid early elections after passing a decree to give cities more tax powers and surviving a key vote in parliament.
The Cabinet approved the decree on fiscal federalism, a priority of Berlusconi’s Northern League ally, in a late-night meeting in Rome yesterday hours after a markup of the law failed to pass in a parliamentary committee. The Cabinet’s move came after the premier won a separate vote in the Chamber of Deputies linked to an underage prostitution investigation targeting him.
“For now, we’re pushing forward,” Northern League leader Umberto Bossi said after the meeting. His party had staked its support for Berlusconi’s coalition, which has more than two years left in its term, on approval of the law implementing the tax measure.
While Berlusconi has warded off immediate political danger, he still must win approval for the decree from President Giorgio Napolitano amid opposition criticism that the legislation may be unconstitutional. Berlusconi said today he expects the president to support the decree.
Political Instability
Asked by reporters whether he anticipates “problems” with Napolitano, Berlusconi said “I hope not” at a summit of European Union leaders in Brussels.
Investor concern that political instability will make it more difficult for Italy’s government to tackle Europe’s debt crisis has boosted borrowing costs. The premium investors demand to hold Italy’s 10-year bonds over comparable German debt fell five basis points today to 135 basis points, down from a euro- era high of 212 on Nov. 30 though more than twice the average of the past decade.
As he seeks to push through the tax overhaul and retain the Northern League’s support, Berlusconi also faces possible criminal charges of engaging in prostitution with a minor and abuse of office. Milan prosecutors are pressing forward with a criminal investigation into allegations that he paid for sexual relations with a 17-year-old and then helped aid her release from police custody on an unrelated charge.
Vote Victory
In the Chamber yesterday, Berlusconi’s People of Liberty party won a vote to delay action on a request by the prosecutors to search the Milan office of one his accountants, Giuseppe Spinelli, who is suspected of making payments on behalf of the premier to women who attended parties at his Milan residence.
The lower house voted 315 to 298 in favor of a motion to shift responsibility for deciding on the prosecutors’ request to a special tribunal instead of the committee originally asked for authorization. One person abstained.
Bossi said the 17-vote victory showed the government still has a “good” majority after it survived a no-confidence motion by three votes on Dec. 14. The defection of Berlusconi’s long- time ally, Gianfranco Fini, and dozens of his backers has left Berlusconi scrambling for a working majority.
Finance Minister Giulio Tremonti called the tax overhaul an “epochal” change that will help Italy to decentralize finances and reduce waste and public debt, which is Europe’s largest in nominal terms. The overhaul “is the biggest structural reform” undertaken in Italy “in decades,” he told a news conference in Rome today.
‘Unconstitutional’
Opposition members, including Chamber Deputy Speaker Rosy Bindi, said the law may be unconstitutional. “It’s extremely grave,” Bindi, a member of the Democratic Party, said in an interview yesterday on television channel LA7. “The government put out a decree that violated procedures because it didn’t take into account the view of parliament,” and Italy’s highest court may rule against it, she said.
After yesterday’s vote, responsibility for deciding on the prosecutors’ request shifts to a special tribunal instead of the committee initially asked to permit the search. Milan Prosecutor Edmondo Bruti Liberati said two days ago he will file a request as soon as Feb. 7 for the start of the trial.
Berlusconi has said he’s willing to be questioned by prosecutors on the condition that the trial is moved to the tribunal of ministers, citing an alleged bias against him by the Milan court. The three-judge tribunal oversees cases against senior government ministers.
The probe, known as Rubygate after the nickname of the young woman at its center, hasn’t further eroded voter support for Berlusconi and his coalition, according to a poll released this week by IPR Marketing. Berlusconi’s popularity held at 35 percent last month, matching the lowest level since his re- election in 2008, the survey of 1,000 adults showed.
To contact the reporters on this story: Flavia Krause-Jackson in Rome at fjackson@bloomberg.net.
To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net
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