Rivals fail to break Italy's political deadlock
ROME (Reuters) - Italian Prime Minister Silvio Berlusconi's closest ally and his fiercest rival failed on Thursday to resolve a government stalemate that could lead to an early election.
Northern League leader Umberto Bossi met lower house speaker Gianfranco Fini, who has bitterly split from Berlusconi, to seek a way out of an impasse pushing Italy toward a full-blown government crisis and a likely snap poll.
Bossi said after the talks there was room for a backroom deal that would see Berlusconi resign and form a new government.
Asked if Fini was open to that, Bossi said: "Reasonably."
However, Fini poured cold water on the prospect of a deal.
"Things are a lot more complicated than they way Bossi is presenting them," Fini said, according to a source in his party.
Fini loyalists said the prime minister must in any case make the first move and step down, something he is loath to do.
"Fini has demanded Berlusconi's resignation, or else we will pull out of the government," said Italo Bocchino, Fini's most trusted lieutenant.
Bocchino said on an evening television program Berlusconi would have resignation letters from all Fini's followers in the government on Monday, after he returns from a Group of 20 summit in South Korea.
Bossi has been the 74-year-old prime minister's sole coalition ally since July when, after months of acrimonious exchanges, Berlusconi expelled Fini from the People of Freedom (PDL) party they co-founded in 2008.
The break-up prompted Fini to set up his own party, depriving Berlusconi of a guaranteed majority in the lower house of parliament and virtually paralyzing the executive.
Fini demanded last Sunday that Berlusconi resign so that a new center-right coalition including centrists could be formed, possibly without Berlusconi at the helm.
If Berlusconi did lead the next government, the FLI would support it only on certain conditions and with a limited legislative program including a change in the electoral law.
He said that if Berlusconi did not resign, he would pull a minister, a deputy minister and two undersecretaries loyal to him out of the government, bringing things to a head.
Bruised by a series of sex scandals and his popularity at a record low, Berlusconi has made it known that he has no intention of stepping down, but most commentators say the countdown to the end of the Berlusconi era has begun.
"In my country I have some difficulties in this moment," an uncharacteristically understated Berlusconi, speaking in English, told his Vietnamese counterpart in Seoul.
The fact that Berlusconi has given the outspoken Bossi the task of working out a compromise with Fini shows the growing influence of the Northern League. There is little love lost between Fini and Bossi, who has ruled out broadening the coalition to include the centrist UDC party.
If Fini pulls his loyalists out of the government, Berlusconi could ask for a confidence vote in parliament, forcing his rival to take responsibility for pulling the plug on the executive. That would clear the way for an early election which most analysts expect to take place next spring.
The timing of the crisis is complicated by the 2011 budget law, which parliament must approve by the end of the year.
Failure might rattle financial markets. Italy has so far been spared the turmoil that has hit Greece, Spain and Ireland, but it has one of world's highest public debts and bonds worth 30 billion euros to roll over in December alone.
One stop-gap solution would be to postpone a final showdown in parliament until after the budget is approved.
An early election is far from certain to bring greater stability. The center-left opposition remains deeply divided, and opinion polls say Berlusconi would probably win a new poll, but might not have a majority in the Senate, the upper house.
(Additional reporting by Paolo Biondi, Roberto Landucci and Francesca Piscioneri; Editing by Philip Pullella and Andrew Dobbie)
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