Italian Prime Minister Silvio Berlusconi may be down for the count. And while a series of scandals could not topple his premiership, economist Carlo Altomonte believes Italy might be ready to caste him aside least the entire country sinks.
From lurid tales of ‘bunga-bunga’ parties to accusations the seventy-five year old media tycoon controls the Italian airwaves, Berlusconi has long fought for his political survival.
But what should be a routine vote to confirm a state financing bill on Tuesday may ultimately become a question of confidence in his coalition government.
With national debt estimated at some 1.8 trillion dollars and fears that Italy is going the way of the Greeks, Carlos Altomonte, professor of Economics at Bocconi University, believes Tuesday’s vote will give Berlusconi little choice but to step down or face greater defeat.
“I think the majority of the government of Italy doesn’t exist anymore, now what Mr. Berlusconi has to decide is whether he wants to go and have a defeat in Parliament and then the winner takes it all or whether he wants to surrender, therefore [[should that be “or”?]] resign and negotiate the conditions of his surrender.”
By most accounts, if Tuesday’s measure doesn’t go through, Berlusconi will resign immediately lest President Giorgio Napolitano calls a formal confidence vote.
The writing first appeared to be on the wall last Wednesday after his cabinet failed to come up with a plan to boost the flagging economy and institute much needed structural reforms.
As a result, Berlusconi was forced to allow the International Monetary Fund to regularly check in to see if Italy was making headway in staving off crisis in the eurozone’s third largest economy.
Since being forced to accept this condition, it has been widely speculated that anywhere between 20 and 40 defectors from his People of Freedom Party may soon abandon ship.
Berlusconi has attempted to woo his detractors with promises of “well-deserved jobs” in his government, while he accused party defectors of “betraying the government and the country.”
But his mix of rewards and threats could not shake doubts that he no longer had the political capital to lead the country through this highly volatile period.
However, Altomonte believes that fears Italy will default are ultimately unfounded, since the eurozone has little choice but to keep the country afloat.
“Because Italy’s too big [not] to be saved, if Italy goes, than France and Germany and the entire eurozone will crumble,” he said.
Altomonte also says that unlike Greece, Italy’s debt is sustainable, though a series of credible reforms and support from international investors will be necessary to provide both market confidence and much needed liquidity.
Whether Berlusconi chooses to stay on and fight or step down, Altomonte argues that there is only one path to take for any future Italian government.
“Elections or a national unity government has to have a government which picks up the rescue package and the structural reform package that Brussels is thrusting on Italy like in Greece.”