Italy Teeters As Berlusconi Refuses To Step Down

Italian Prime Minister Silvio Berlusconi denied again that he was about to resign on Monday, an announcement that sent Italy's borrowing costs close to a level most analysts believe is unsustainable. Berlusconi is seen by many Italians as a major obstacle to Italy's escape from its current financial woes. He faces a number of difficult votes in parliament this week, but if forced to step down, he'll call new elections. However the opposition parties, and even some members of Berlusconi's own coalition, would prefer to see a new government of national unity to steer Italy through its present crisis. Guy Raz speaks with NPR's Sylvia Poggioli, who is reporting from Rome.

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GUY RAZ, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Guy Raz.

ROBERT SIEGEL, HOST:

And I'm Robert Siegel.

Italian Prime Minister Silvio Berlusconi today denied rumors that he is resigning, but doing so only made matters worse for him. The announcement sent Italy's borrowing costs soaring, close to a level that most analysts believe is unsustainable.

RAZ: Berlusconi is seen by many, at home and abroad, as a major obstacle to Italy's escape from its current financial woes, and he faces important votes in parliament this week. Should Berlusconi be forced to step down, he will insist on new elections. But most opposition parties and many of his own supporters want a national unity government that would pass reforms to avert financial disaster.

For more, we're joined by NPR's Sylvia Poggioli in Rome. And, Sylvia, a week ago, Berlusconi was assuring world leaders at the G20 Summit that Italy would go ahead with reforms. Now, he's close to resigning. What happened in the last few days?

SYLVIA POGGIOLI BYLINE: Well, what happened was that at the G20 Summit, it was a big humiliation for Berlusconi. Italian media reported that while he was there, he was given the cold shoulder by both Presidents Obama and Sarkozy of France. And in closed-door sessions, Berlusconi was taken to the woodshed and told outright that the economic reforms he has promised are too vague and just that, promises.

You know, Italy's E.U. partners are very worried that with a $2.6 trillion in debt, a potential Italian default could break up the Eurozone and seriously impact the world economy. IMF Director Christine Legarde said clearly that Italy lacks credibility, and Italy now will be monitored by the IMF every three months.

So even without having received a bailout from the E.U., the third-biggest economy in the Eurozone was essentially put in receivership, and that is seen here as a loss of national sovereignty. Now, Berlusconi tried to brush off the economic crisis claiming restaurants and vacation resorts are full. And that did not go well - down well with the Italian public. On his return home, he also found that the government was sinking and many of his most loyal supporters were abandoning ship. Several of his lawmakers have asked him to step down. And, as you said, Italian borrowing costs are soaring to record levels.

RAZ: OK. But Berlusconi says he has no intention of resigning. He claims he has enough backers in parliament to survive a confidence vote. Does he?

BYLINE: It does not look like it. His own interior minister, Roberto Maroni, said last night on TV, we no longer have a majority. Berlusconi has called the rebels traitors. But he's convinced he can woo back some of them the way he has in the past. Don't forget he's Italy's richest man, and he has - he knows how to use his patronage power.

But most analysts think it won't work this time. His support has really eroded a lot. Not only in the polls, he's lost the backing of the influential Industrialists Federation, which used to consider him a champion of business interests. The other institution that had for years backed Berlusconi but has now abandoned him is the Italian Catholic Church. Berlusconi had sponsored many laws that reflect and promote Catholic dogma, and he opposes same-sex civil unions. But after all his sex scandals, the Bishops' Conference has taken its distance from Berlusconi. And that's kind of important here in Italy because the church can still deliver a lot of votes.

RAZ: Sylvia, what happens if Berlusconi is forced to resign? What next?

BYLINE: Well, he insists the only outcome should be early elections, and that way, he would remain in office until then. But the opposition parties want a creation of a national unity government. A broad coalition, they say, led by a technocrat would be the best place to push through unpopular austerity measures and would win the confidence of the markets and Italy's E.U. partners.

Berlusconi doesn't want that. He's also very worried about what can happen to his vast business empire if he's forced to step down. Today, he left Rome for his villa in Milan for a meeting with his children who run some of his companies, and he was hunkering down there today.

RAZ: That's NPR's Sylvia Poggioli in Rome. Sylvia, thanks.

BYLINE: Thank you, Guy.

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