Berlusconi party abstains in gov't confidence vote

Milan stock market drops amid growing fears over the future of Monti government

Associated Press

ROME (AP) -- Lawmakers belonging to Silvio Berlusconi's center-right party abstained Thursday from a confidence vote in the government of Premier Mario Monti, raising questions over its future and the progress of its economic reform program.

Though the government of unelected technocrats won the vote in the Senate by 127 to 17, investors feared the move heralds a period of political uncertainty in the run-up to planned elections next year. Another confidence in the lower house is due later.

"There is the whiff of crisis," political scientist Roberto D'Alimonte of Rome's LUISS University said on Sky TV 24. "We will see in the next hours."

Monti's government has survived numerous confidence votes in the year since it took over from Silvio Berlusconi after the markets lost confidence in his ability to shield the country from the continent's debt crisis.

After a period of seeming calm over Italy, investors have returned their focus to the country. Though the government is expected to win the second confidence vote, the developments highlighted the fragile nature of the consensus in Italy over Monti's economic reform program, such as liberalizing the labor market and the raising of the pension age.

The Milan stock exchange fell with the benchmark FTSE MIB trading 1.2 percent lower at 15,770, in contrast to most of Europe's main indexes, which were trading higher.

The worries were evident in the bond markets too, where the yield on the country's 10-year bonds rose by 0.11 percentage points to 4.51 percent.

The Italian economy, the third-largest of the 17 European Union countries that use the euro, is in recession as the government enacts tough measures to get a handle on its debts. Italy has the second-highest debt level as a percentage of its GDP in the eurozone. Only Greece's debt is higher.

The popularity of Monti's government, over a year into power, has been somewhat weakened with the recession and political parties are positioning themselves for elections next year. Monti has said he would be available for a second term, but has excluded running for office. He could, however, be tapped if no party wins a clear majority.

The 76-year-old Berlusconi has been hinting at a comeback, after earlier saying he would leave the party to a younger candidate. Berlusconi claims allies are pressing him to return, hoping that Monti's painful austerity measures will win votes for the center-right.

However, his party is trailing sorely in the polls. He also is appealing an October tax fraud conviction and awaiting a verdict in the coming weeks in his trial on charges of having sex with an underage woman and using his office to cover it up. He says he is innocent.

Economic Development Minister Corrado Passera angered Berlusconi supporters by saying that it would not be good for Italy's image abroad "to go back."

"We need to give the sensation that the country is moving ahead," Passera said on RAI state-run television.

Leading the polls at present is the center-left Democratic Party, which has been energized by a lively primary that saw party secretary Pier Luigi Bersani win the nomination.

While some smaller centrist parties have signaled that they would welcome another Monti term, Bersani has been particularly adamant that it is time for elected politicians to take over.

He called the center-right's tactics "irresponsible" and reaffirmed his party's loyalty and support of the Monti government during the present legislature.

____

Barry reported from Milan

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