Analysis: Berlusconi move could undermine Monti agenda in Italy

Tue Dec 11, 2012 11:09am EST
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By Barry Moody

ROME (Reuters) - Silvio Berlusconi's decision to stand in Italian elections increases the risk of a large populist bloc in parliament that could severely hinder attempts to continue the legacy of outgoing Prime Minister Mario Monti.

Monti, the man foreign governments and investors desperately want to continue governing Italy, announced his intention to resign on Saturday, soon after Berlusconi's PDL party withdrew its support from his technocrat government and launched a frontal attack on his austerity policies.

Monti's decision followed Berlusconi's announcement that he would stand as the People of Freedom (PDL) candidate in the election expected in mid-February.

Some of the jitters on financial markets since then - which have pushed up the effective interest rate on Italian government bonds - seem to have been prompted by fears that the scandal-plagued media magnate could return as prime minister.

While this is a remote possibility given the PDL's low ratings in opinion polls, there could still be plenty of reason for nervousness.

Berlusconi's tactics appear aimed not at winning the election but to have enough power in the Senate or upper house to make life difficult for the pro-European center-left government expected to succeed Monti. It would also help Berlusconi, who was forced from power a year ago, to protect his troubled personal interests.

This could undermine center-left leader Pier Luigi Bersani's promise largely to continue Monti's prudent economic policies.

"This is Berlusconi's calculation. He hopes to have a hung Senate ... He hopes to be in a situation where he doesn't govern but prevents government," former diplomat and commentator Sergio Romano told Reuters.   Continued...

Italian Prime Minister Mario Monti gestures during a media conference at the Chigi palace in Rome December 6, 2012. REUTERS/Stefano Rellandini