Search for new premier after Prodi’s resignation

Search for new premier after Prodi’s resignation
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First Published: Thu, Feb 22 2007. 11 36 PM IST
Updated: Thu, Feb 22 2007. 11 36 PM IST
Italian President Giorgio Napolitano begins consulting the country’s political leaders today as he seeks a new head of government after the surprise resignation of Prime Minister Romano Prodi yesterday.
Napolitano will likely favour a second Prodi government, or a new premier from within Prodi’s coalition, rather than force Italians to return to the polls just 10 months after the last national election. The meetings with party and parliamentary leaders will continue through tomorrow evening, postponing any decision until at least after 8 p.m.
“The most likely scenario is that Giorgio Napolitano will reappoint Prodi,” said Robert Leonardi, an advisor to Prodi in 1997 and a senior lecturer on European politics at the London School of Economics. “Given the fact that elections were last year and the mandate was for Prodi, it would be difficult for anyone else in the coalition to substitute him.”
Prodi was the head of Italy’s 61st government since World War II, and he resigned after failing to hold his majority in a key Senate vote on foreign policy, exposing the divisions in his nine-party coalition. His grip on power was always precarious because he held just a one-seat advantage in the Senate after winning the closest elections in modern Italian history.
Most Italians don’t want new elections, according to a poll today by Rome-based IPR Marketing, with 54 % of those surveyed saying they favor either another Prodi government or one led by one of his allies. The survey, published on the Web site of newspaper la Repubblica, gave no details about how many people were interviewed or the margin of error.
The yield on the benchmark 10-year Italian bond rose 2 basis points to 4.30 % at 11:25 a.m. in London. The gap in yields, or spread, against the similar maturity German 10-year bund was at 23 basis points. It reached 25 basis points earlier, its widest since January.
Shares of state airline Alitalia SpA declined 0.8 % to 1.05 euros at 12:15 p.m. in Milan. The government’s collapse may disrupt the state’s planned sale of a controlling share in the company. Shares of former Premier Silvio Berlusconi’s Mediaset SpA television company rose 0.8 % to 9.22 euros. Prodi had planned to change the law regulating the media.
Divided Coalition
Prodi’s nine-party coalition included communists and Catholic parties who were often at odds. Most recently, the two factions clashed over a bill that paves the way for same-sex unions. Laws needed to fund the Afghanistan mission last year required confidence votes to win the support of the communists. The coalition also disagreed on the government’s budget plan, pension reform, and tax policy.
Prodi, 67, has depended on the support of seven honorary, life-appointed Senators to pass laws and at times keep his government from collapsing. Berlusconi’s government changed the electoral law before the April vote, virtually ensuring the winner would have a narrow majority in the legislature’s upper house.
Popular support for Prodi has been waning, even as confidence in his government has picked up. Confidence in Prodi, a former European Commission president, fell to 36 %, the lowest level since the election, according to a 14 February poll published in laRepubblica. The survey showed that confidence in his government rose 2 percentage points to 44 %.
Higher Taxes
Support for Prodi slipped after he introduced a budget that raised taxes on most people earning more than 40,000 euros ($53,000) a year as he sought more revenue to bring Italy’s budget deficit back within European Union limits. The economy expanded 1.1 % in the fourth quarter, the fastest pace in seven years. The growth helped lift consumer confidence but did little for Prodi’s personal standing.
The resignation will not have any immediate effect on Italy’s sovereign debt rating, Standard & Poor’s said in an e- mailed statement. S&P cut Italy’s credit rating to A+ from AA- six months after the election “based upon the inherent weakness of the multiparty coalition government,” the statement said. Moody’s Investors Service said today it had not plans to review Italy’s credit rating or stable outlook.
“The biggest concern is that the agenda gets stalled,” Fitch Ratings credit analyst Brian Coulton said in an interview. “We’re going back to short-term governments, with no continuity and that would be a concern for us,” he said.
New Elections
Berlusconi’s Forza Italia party and two of his opposition allies called for new elections after Prodi’s resignation. Pier Ferdinando Casini, the leader of the Union of Christian Democrats party. Casini briefly abandoned Berlusconi’s coalition last year, causing Berlusconi to resign and then form another government, a common occurrence in Italy where the electoral system tends to favor the creation of unwieldy coalitions, rather than unified parties.
Casini suggested he may offer support to a new government as long as it wasn’t led by Prodi.“Let’s sit down around a table and put our policy priorities in the middle,” Casini said in an interview with RAI state television. “We need to try to give the country the answers it seeks.”
The Democrats of the Left, the largest party in Prodi’s nine-way coalition, said it “reconfirmed full confidence in Prodi,” in a statement put out from the party’s headquarters.“There needs to be a political clarification that restores the cohesion of the center-left coalition,” the statement said. Leaders of other parties in Prodi’s coalition made similar comments.
Afghanistan Mission
In yesterday’s vote, Prodi’s coalition failed to back a motion in support of Italy’s participation in the NATO-led Afghanistan mission, showing the premier didn’t have a majority in the Senate.
Prodi’s first government fell in 1998 when the Refounded Communist Party withdrew its support. Yesterday Prodi fell victim to two, far-left “pacifists” who refused to vote with their parties.
The previous government planted the seeds of instability in the Senate by changing the electoral law. Berlusconi’s electoral law includes a so-called “majority prize” that awards the winner a minimum of 54 % of the seats in the lower house of parliament.The majority bonus doesn’t work in the Senate, which selects candidates regionally, meaning only a landslide victory can produce a margin of more than a dozen in the 315-seat assembly. The two houses have equal legislative powers.
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First Published: Thu, Feb 22 2007. 11 36 PM IST
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