Berlusconi agrees to step down

[Lord Zentei]

Well, how about that.

Rome (CNN) -- Italian Prime Minister Silvio Berlusconi has said he will step down after the next budget is approved by parliament, a statement from the president's office said Tuesday.

The news came hours after Berlusconi's government passed a key budget vote in the lower house, but fell eight votes short of a parliamentary majority.

The office of President Giorgio Napolitano confirmed that Berlusconi had agreed to resign when the budget is confirmed by the senate, following a meeting between the two men Tuesday evening.

Napolitano is expected to give further details soon of what might come next, expected to be either the formation of a technocratic government or general elections to be held in the next couple of months.

International concern has focused on Italy, the third-largest economy in the eurozone, in the past few weeks as analysts worry that the financial crisis centered on Greece might spread.

While Italy is solvent, it holds a huge debt pile and investors fear it may not be able to sustain that level of borrowing. As the world's eighth-largest economy, a meltdown would send shock waves through the global economy.

It is not yet clear how soon Berlusconi will step down, but news of his imminent departure signals the end of an era in Italian politics.

The 75-year-old business tycoon had weathered many previous crises, including sex scandals and corruption trials, during his three terms in office.

But the loss of his parliamentary majority -- and with it his ability to command the government -- was a blow from which Berlusconi could not recover.

He had come under enormous pressure to resign in recent days, with what should have been a routine vote on the 2010 budget seen as a test of whether he still had the confidence of the government.

The budget passed with 308 votes, as all but one of those present in the lower house voted for the measure. The lone holdout abstained.

However, more than half of the country's 630 lawmakers did not take part in the vote, a clear indication that Berlusconi no longer had the backing of a majority in parliament.

Opposition lawmakers chose to abstain as they did not want to prevent the budget being approved, since it is necessary for the government to function, but equally did not want to lend Berlusconi any support.

Italy agreed to implement structural reforms during a European Union meeting in Brussels last month.

Napolitano said the reforms must be put in place or risk Italy's credibility in the international community, raising questions over his confidence in Berlusconi's ability to see them through.

Berlusconi's main coalition partner added fuel to the fire Tuesday, saying he had asked Berlusconi to take a sideways step.

Umberto Bossi of the Northern League suggested that the prime minister should be replaced by former Justice Minister Angelino Alfano, although his office played down the remarks as "not the official line."

Without the support of the Northern League, Berlusconi was in a very difficult position.

Although Italy passed a package of austerity measures in September, including tax increases, some economists fear that without further reforms, its debts could become overwhelming, and there would not be enough money in the European rescue fund to bail it out.

There have been growing fears that Berlusconi's government no longer had the strength to push through the austerity measures needed to get the economy back on track.

These include tax increases and raising the retirement age by two years, to 67.

The markets are watching events in Italy closely, as the ripple effects of a crisis there would be far more serious for the global economy than a collapse in Athens.

Although Italy's economy is in much better shape than that of Greece, rising borrowing costs for the Italian government are adding to the pressure.

The nation, which has debts equal to about 120% of its economic output, has one of the largest bond markets in the world, worth an estimated 2 trillion euros (about U.S. $2.8 trillion).

Experts say the recent lofty interest levels are particularly concerning because the European Central Bank has been buying Italian bonds since the start of August. The move initially pushed yields below 5%, but that was short-lived.

Italian bond yields hit record highs Monday, getting perilously close to the 7% mark. The 7% level isn't an automatic trigger, but it is the level that prompted bailouts for Portugal and Ireland.

Italian 10-year bond yields remained well above 6% Tuesday, reaching a high of 6.74% before easing to 6.62%.

Many protesters over the weekend called for Berlusconi to step down and said they want immediate elections. Others pushed for a technocratic transitional government to guide Italy through the difficult months to come.

Berlusconi said Friday at the G-20 economic summit that Italy had agreed to let the International Monetary Fund "certify" its reform program, a step designed to boost investor confidence.

[Siege]

I'll believe it when I see it. How many times has Berlusconi promised to step down now, only to find some sorry excuse not to at the last moment? His ass is superglued to the big seat, probably at least partially because the Italian courts are going to have a field day with him as soon as he's out of office.

[Lord Zentei]

Possibly. And he's been out of office before now, but he always pops back up like a bad penny. But I guess we'll see.

[Siege]

Well, always nice to be pleasantly surprised. He's out:

Silvio Berlusconi bows out after Italian MPs vote for savage cuts
Presidential palace confirms PM's resignation, bringing to an end Berlusconi's 17-year domination of Italian politics

Silvio Berlusconi has resigned as prime minister of Italy after a historic vote paved the way for a new government in Rome tasked with shoring up the country's economy and taking it off the frontline in the eurozone crisis.

With his formal resignation, which was confirmed by the presidential palace on Saturday night, the 75-year-old billionaire brought down the curtain on a government that has played a significant role in taking the European single currency and the global economy to the brink of catastrophe. The dramatic end of Berlusconi's 17-year domination of Italian politics came as the lower house of parliament approved a package of savage cuts and stimulus measures demanded by the European Union to trim Italy's massive €1.9 trillion debt.

After losing his majority in the house, a weakened Berlusconi had pledged to resign as soon as he had pushed the reform package through parliament in record time. The reforms were passed with 380 votes. Opposition parties did not participate.

The vote was passed as José Manuel Barroso, president of the European commission, issued a sharp rebuke to Eurosceptics in the UK who want to use the current crisis to disengage from the European Union. Writing in the Observer, he said all members of the EU need to unite and "advance together".

Despite support eroding within his own ranks, Berlusconi was greeted by cheers of "Silvio, Silvio", and given a standing ovation by his party in the chamber as he entered parliament and took his seat. Fabrizio Cicchitto, a member of Berlusconi's Freedom People party, told MPs: "We express all our solidarity to him for the attacks he has suffered." Berlusconi stood to give a slight bow to the chamber.

Italy's longest serving postwar prime minister arrived at Rome's Quirinale palace on Saturday night to hand his resignation to President Giorgio Napolitano, who is expected to nominate former EU commissioner Mario Monti to head a "technocratic" government.

As the vote was passed, joyful demonstrators celebrated the apparent end to Berlusconi's scandal-filled career. One protest group called for Italians to fly the national flag from windows. Berlusconi will hand his successor the unenviable task of imposing unpopular measures on a nation that, mesmerised by his unquenchable optimism, only half-believes it needs them.

Ministers in the Freedom People party, including former neofascists, were continuing to demand elections over a potential Monti administration, prompting Napolitano to issue a stern warning that "all political forces must act with a sense of responsibility".

Berlusconi appeared to throw his lot in with Monti by inviting the respected economist to a two-hour lunch at his Rome residence before the vote in parliament. Refering to Napolitano's likely anointing of Monti, Berlusconi's justice minister, Nitto Palma, said: "We are in his hands." But the rebellion within Berlusconi's ranks could sow the seed for later revolts against a Monti government.

The need to win over Berlusconi's party – the biggest in the Italian parliament – was exacerbated by the continuing refusal of the Northern League, Berlusconi's coalition partner, to back Monti. The opposition Italy of Values party, meanwhile reversed its earlier resistance to a Monti government.

With left and right bitterly divided following the turbulent Berlusconi years, it appeared the only solution acceptable to a majority in parliament would be a government of unaligned technocrats. The sole politician being touted, as the likely foreign minister, was socialist Giuliano Amato, the veteran former prime minister. Several professors from Milan's Bocconi University, where Monti is president, are expected to be in the new cabinet.

In normal circumstances, the president would begin a round of consultations on Monday with the party leaders. But it looked as if the head of state would try to confirm Monti as prime minister by the time the markets open in Europe.

As some of Berlusconi's followers protested at the speed with which the new government was being imposed, Napolitano pleaded for a sense of responsibility. In Milan, journalist Giuliano Ferrara held a meeting in support of elections and said bond yields were being used "like armoured cars" to suppress democracy. Roberto Maroni, the League interior minister, claimed Italy was under unfair pressure from the EU to abandon its right to hold elections. "I don't think there is a precedent to someone going to a sovereign state and telling people what they should do," he said.

Monti's likely decision to leave politicians out of a new cabinet could give it the neutrality it needs to keep Italy's political factions on side. The new government will have a limited time to implement the spending cuts and stimulus measures, which include an increase in the pension age, a sell-off of state property and incentives to hire women and the young.

But economist Nouriel Roubini warned that the measures were not enough to keep Italy from a risk of debt default and ejection from the eurozone. "I would think that in the next 12 months there is a high likelihood that Plan A for Italy is not going to work," he said.

All day, crowds took to the streets in front of parliament as Berlusconi prepared to put an end to the most extraordinary career in the politics of modern Europe. The Berlusconi era began 17 years ago with Forza Italia!, a party named after a football chant, and ended in the lurid murk of "bunga bunga" parties and alleged juvenile prostitution.

With his genius for communication and readiness to make extravagantly implausible promises, Berlusconi secured for himself a place in history as Italy's longest-serving leader since the country's fascist dictator, Benito Mussolini. He long outlasted his early counterparts: when he first held office John Major was Britain's prime minister and Bill Clinton the US president.

[Phantasee]

Best joke so far: "Of course he stepped down. Berlusconi doesn't do anything over 17 years."

Good luck to the Italians.

[K. A. Pital]

Good riddance. Piece of human trash.

[Big Orange]

As with the Tunisians, Egyptians, and Libyans, I don't think it's over yet for the Italians after (in a less dramatic fashion) they've booted a corrupt leader that's been in power for too long:

Analysis: Berlusconi's end could trigger political earthquake
(Reuters) - The fall of Silvio Berlusconi, driven from power to the jeers of hostile demonstrators, is likely to trigger a major political upheaval in Italy like the one that brought him to power 17 years ago.

But while the ignominious end of the flamboyant media magnate, who was harried by crowds yelling "clown" when he resigned on Saturday, undoubtedly marks a turning point, what will follow is still deeply uncertain.

"Getting rid of Berlusconi is the end of an era. Whether it is the beginning of a new era or the beginning of a slow falling apart and drift is a big question," said Vivien Schmidt, international relations professor at Boston university.

Berlusconi loomed large over this country for nearly two decades after bursting onto the scene in 1994 after a major corruption scandal swept away the old order.

His charisma, communication skills, near control of the media and huge wealth combined with political dominance to give him enormous power that extended into all areas of Italian life.

Plagued by lurid sex scandals and court cases for fraud, he is accused of lowering the quality not just of political life but of society, with the scantily clad starlets who starred on his television shows and allegedly attended orgies at his villa acting as a damaging role model for young women.

His removal, with no comparable figure in the wings to replace him, would mark a revolution by itself but the traumatic way he was finally pushed out, with Italy on the brink of an economic catastrophe, has set in train other forces that could transform the political landscape.

"It changes the tenor. I think we are going to see a different temperament in Italian politics, there is no great charismatic figure like Berlusconi who will dominate the stage," said Professor Erik Jones of Bologna's Johns Hopkins university.

The installation of a technocratic government led by former European Commissioner Mario Monti -- brought in by Italy's president to end a crisis when Italy's borrowing costs rocketed to unsustainable levels -- is likely to strengthen forces tearing apart the old order.

DILEMMA

Both left and right will face the dilemma of supporting reforms pursued by Monti to restore international confidence but which will be very unpopular with some of their constituents.

Berlusconi's own PDL party is badly split over whether to support a government many consider undemocratic. Experts say the party, built entirely round Berlusconi, could collapse, setting off a major political realignment in the center and right.

The crisis has also caused tensions in Berlusconi's coalition ally the Northern League with its mercurial founder Umberto Bossi in danger of suffering the same fate as his partner.

The League is likely to end the coalition with the PDL and go into opposition, which would cause turmoil in many municipal governments in the North where the two parties are allied.

There are equal strains on the Left where the biggest force, the Democratic Party, could be badly divided over supporting Monti's government when it implements labor market reforms opposed by its trade union allies.

"There are schisms in the Democratic Party...there are centrifugal forces that are quite profound at the moment," said Jones. "It's going to be an extraordinary period of polarization and fragmentation," he told Reuters.

"In the 20th and now the 21st century, every Italian generation has reinvented itself, usually with major stimulus from outside...this major financial crisis coincides with the end of Berlusconi's shelf life," said James Walston, political science professor at the American University in Rome.

The departure of Berlusconi may also lead to some cleaning up of corruption and unethical behavior which critics say he accentuated by a huge conflict of interests between his media and industrial empire and political power.

They accuse him of using his position to fend off dozens of legal cases.

"This conflict of interest paralysed politics for 20 years and had a very pernicious effect on the economy, on politics, on the whole of public and cultural life," said John Foot, professor of modern history at University College London.

Sergio Romano, a respected commentator and former ambassador in Moscow said: "Berlusconi's conflict of interest contaminated Italian society. Frankly, I do not remember another moment in Italian history when there were so many scandals involving politicians."

Walston agreed: "The fact that anything goes has become even more prelevant, the illegality small and big. If you are in a position of power you can do whatever you want, a presumption of impunity".

STARLETS

The impact of Berlusconi's departure on another part of Italian life is much less certain. The dominance of fluffy variety shows starring shapely women in skimpy clothes is likely to continue on his television channels, even if his control of the state broadcaster has ended.

In fact five women wearing tight blouses and skirts pranced about on another channel at the very moment news stations were showing Monti solemnly accepting his mandate on Sunday night.

"It will take a long time to change the social consequences of Berlusconi, which started before he became a politician, that if you wiggle your bottom nicely you can get anywhere you want," said Walston

Berlusconi was seen as accentuating a general process that demeaned women by brazenly appointing former models as ministers or local counselors.

"I think the world of sex and power will continue in the television world. Hopefully in the political world it wont be so important. The idea that you could become a minister or counselor by appearing on television with Berlusconi or having an affair with him. That happens in every society but the level it has reached in Italy is quite grotesque," said Foot.

Romano believes that if Monti overcomes considerable political obstacles and serves long enough to implement major reforms, he could create the foundation for a transformation of Italy.

But this would also depend on major constitutional changes to reform a cumbersome system that has delayed and blocked modernization for years, Romano said.

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