Italy political crisis: Emergency talks aim to save Enrico Letta's coalition from Berlusconi exit

Premier Enrico Letta accuses People of Liberty party of 'a big lie and attempt to distort reality'

Italy's Prime Minister Enrico Letta (right) and Interior minister Angelino Alfano (Reuters)

The Italian Premier, Enrico Letta, has entered crisis talks with the President, Giorgio Napolitano, to see if the country’s fragile coalition could be saved after the centre-right leader Silvio Berlusconi served notice that he intended to pull the plug on it.

The five Cabinet ministers from the disgraced mogul’s People of Freedom (PDL) party said on Saturday they would quit the left-right coalition, thereby plunging Italy into another period of uncertainty, with Berlusconi calling for fresh elections.

Whether this is a last-ditch bluff by the PDL to make Mr Letta cede to demands regarding Berlusconi’s legal problems and his populist tax policies was unclear: the resignations have yet to be formerly tendered.

But Mr Napolitano, who has worked tirelessly to hold Italy together during two years of on-off political crisis, has made it plain that he sees a return to the polls as a last resort, with speculators ready to pounce at signs of renewed financial instability.

He is expected to urge Mr Letta to seek defectors from the populist Five Star Movement and even moderates from the PDL to prop up the seven-month-old administration until key legislation on electoral reform and finances have been passed.

Meanwhile, celebrating his 77th birthday at his mansion in Arcore, near Milan, Berlusconi, the former premier who in October is due to start a year of house arrest or community service for a tax fraud conviction, issued a statement blaming Mr Letta’s refusal to prevent a sales tax rise.

The claims were dismissed by Mr Letta. “In order to justify this stupid and irresponsible act, done entirely to cover his personal problems, Berlusconi is trying use the excuse of the Iva tax [VAT] as an alibi,” he said.

Berlusconi has been enraged over the opposition’s intention to ban him from parliament under an anti-corruption law that demands the expulsion of convicted criminals.

Social media sites were full of comments this weekend accusing Berlusconi of holding the country to ransom. The left-wing daily Il Fatto Quotidiano summed up the mood with the headline: “The convict has made Italy fail.”

Centre and centre-right newspapers also attacked Berlusconi and the PDL.

Mario Calabresi, editor of the centrist Turin daily newspaper La Stampa, called on PDL parliamentarians to put national interests above those of their discredited leader. “It’s about time they found the dignity and strength” not to participate “in a gesture that hurts the whole country”, he said, a view shared by the business newspaper Il Sole 24 Ore.

The weekly Christian Family said that in his latest act of political brinkmanship, Berlusconi had “lost the final thread of his dignity”.

Despite not being a member of the government and being on the verge of losing his Senate seat, Berlusconi dismissed as “unacceptable” a demand by Mr Letta on Friday for parliament to back the government in a confidence vote next week.

A period of stable government is generally seen as vital, now that Italy shows signs of emerging from its worst recession since the Second World War. Deputy economy minister Stefano Fassina said today that bond yields would rise by up to 300 basis points if elections were called.

He predicted, however, that there would be enough defectors in the Senate to avoid fresh elections.

Mr Fassina’s comments followed indications that some senior PDL figures were unhappy with Berlusconi’s antics. The long-time Berlusconi loyalist Fabrizio Cicchitto criticised the way the announcement had been made.

Berlusconi has said he intends to turn the PDL back into Forza Italia, the party he founded 20 years ago, in order to fight the next election.