* Letta says crisis would have "dramatic costs"
* Business leaders warn against new elections
* Key Senate committee on Berlusconi meets on Monday
By Luca Trogni
CERNOBBIO, Italy, Sept 8 Italian Prime Minister
Enrico Letta warned of the risk of fresh political turmoil on
Sunday, a day before a Senate committee meets to decide whether
to expel the country's former leader Silvio Berlusconi from
As the two main partners in his fragile coalition prepare
for a showdown over Berlusconi's future, Letta told business
leaders that economic recovery had been hampered for too long by
Italy's "permanent political chaos".
"Instability has a cost, it would mean that interest rates
rise again and we'll all have to pay more," he said at a
conference in the lakeside town of Cernobbio outside Milan.
"Instability has drastic costs, whereas stability pays."
Letta, named as head of an unwieldy coalition between his
own centre-left Democratic Party (PD) and Berlusconi's People of
Freedom (PDL) after last February's deadlocked elections, said
his 130 days in office had not been easy.
"But I reject the caricature which says we have done
nothing," he said, pledging to "break the chains" which have
blocked reform of an economy which has been stagnant for more
than a decade and deterred foreign investors.
Letta's comments come a day before a Senate committee meets
to begin deliberations which could lead to Berlusconi, who has
dominated Italian politics as a politician and media magnate for
decades, being expelled from parliament following his conviction
for tax fraud last month.
The cross-party panel has become the focal point of a battle
over the political future of the 76 year-old billionaire, who
was sentenced to a four year prison term which is likely to be
commuted to one year under house arrest.
The PDL has warned it will pull out of the coalition and
bring down the government if centre-left members vote to start
proceedings for expulsion although Berlusconi faces at least a
year in political exile in any case once his sentence begins.
With memories of the euro zone debt crisis of two years ago
still fresh and Italy struggling to emerge from recession,
Economy Minister Fabrizio Saccomanni warned on Saturday that a
coalition breakdown would risk fresh bond market tensions.
"I hope the government doesn't fall," said Marco Tronchetti
Provera, chairman of tyre maker Pirelli, echoing the concern. "I
hope that a solution is found and that the country can start
taking care of concrete problems in the interests of everyone."
President Giorgio Napolitano, who would have to decide
whether to call new elections or seek to build a new coalition
if the PDL withdraws support, has made it clear he does not want
a new vote less than a year after the last election.
In an interview with the conservative Il Tempo newspaper on
Sunday Gaetano Quagliariello, a PDL minister generally
considered a moderate, played down the risk of a crisis.
"I don't think snap elections at this moment would help
either the country or Berlusconi," he said.
Berlusconi's lawyers have appealed to the European Court of
Human Rights to strike down the so-called "Severino law" which
bans politicians convicted of serious criminal offences from
parliament and the PDL wants the Senate committee to delay any
vote while the court decide.
How quickly the committee reaches a decision remains open
but the PD has rejected any attempt at what it calls
time-wasting and says the law as it stands must apply to
Behind the apparently intractable positions, however, there
may be scope for an arrangement which allows more time to work
out a deal that could avoid a definite break.
Fabrizio Cicchitto, a former PDL floor leader in the lower
house told the right wing Libero newspaper, which is generally
close to Berlusconi, that much would depend on how the committee
meeting plays out.
A discussion cut off in a couple of days, turning the
committee into a "firing squad", would be a "provocation". But
if PD members took time to discuss the status of the Severino
law "we should maintain our support for the government."
"We can act in reaction, that's one thing, but if we in the
PDL were the first ones to set off the crisis, we would be
making a serious mistake," he said.