Berlusconi says will not run again as markets dip
Italian Prime Minister Silvio Berlusconi said he will resign by the end of the month and will not run for office in any future election as financial markets plunged Wednesday over the political turmoil.world Updated: Nov 09, 2011 17:00 IST
Italian Prime Minister Silvio Berlusconi said he will resign by the end of the month and will not run for office in any future election as financial markets plunged Wednesday over the political turmoil.
"I won't run for office," Berlusconi told La Stampa daily after announcing he will step down once an economic reform law is adopted in parliament, effectively announcing the end of a political career spanning two decades.
"As soon as the reforms are approved I will resign... the procedure will be complete by the end of the month," the colourful 75-year-old tycoon said, adding: "I feel liberated."
Italian stocks initially opened higher but later plunged by more than 3.0% in mid-morning trade, reflecting investor fears that the country was entering a period of political limbo.
Borrowing rates on 10-year bonds also hit a new record high of 6.86%, while the rates on two and five-year bonds rose above 7.0%.
The premier's hand was forced following a shock parliamentary revolt and unprecedented pressure from markets that fear the eurozone's third largest economy could be the next victim of the debt crisis gripping Europe.
"It's important to act fast: the sooner we act, the sooner we can get out of this infernal carousel, this unbelievable situation, with markets that push and squeeze," Berlusconi added.
Among the options post-Berlusconi are an expansion of the current centre-right coalition, the formation of a national unity government or, failing other options, the dissolution of parliament and early elections.
"Seeing as there isn't another possible majority, I see elections for the beginning of February, but I won't be running," Berlusconi said.
"Now is Alfano's moment. He will be our candidate for premier," he said, referring to Angelino Alfano, the head of Berlusconi's People of Freedom (PDL) party.
"Everyone has accepted his leadership," he said.
The premier told GRR radio that a broader majority based on a coalition between the PDL, Northern League and the Union of the Centre (UDC) party was unlikely, saying he believed the opposition UDC was too tied with the left.
Investors initially hailed the news of his resignation with stock rallies in the United States and Asia but there was caution too.
"This is a relief for now but the reality is that there might be a real hangover and a price to pay," said Peter Cardillo, chief economist at Rockwell Global Capital in New York
Top-selling Italian daily Corriere della Sera said Berlusconi's "slow-motion" demise "could introduce a degree of temporary ambiguity that would be destructive for a country exposed to months of financial speculation."
Il Messaggero said: "He should have resigned immediately," warning that the time lag "exposes us to the risk of more blows from international speculation and from European institutions that already have little trust in Berlusconi."
A Senate committee was set to meet Wednesday to discuss the proposed reforms to boost Italy's virtually stagnant growth rate, including measures to boost competition in the labour market and encourage hiring.
The talks in parliament should also help lay out a timetable for expected final approval of the measures and therefore for Berlusconi's exit, with the centre-left opposition now calling for rapid adoption of the budget law.
Under the current timetable, the measures should be approved by the upper house next week and by the lower house before the end of the month.
The combination of Italy's anaemic economic growth rate and 1.9 trillion euro ($2.6 trillion) debt mountain has triggered investor alarm that the country could be engulfed in the European debt crisis.
European Union and European Central Bank officials were in Rome for ministerial meetings as part of a special EU-IMF surveillance mechanism that Berlusconi agreed to under pressure at the G20 summit in France last week.
Berlusconi has promised his fellow eurozone leaders to overhaul Italy's pensions system and accelerate sales of state assets, but the reforms have stalled to the intense frustration of Germany and others.
The premier is currently a defendant in three trials for bribery, tax fraud, abuse of power and paying for sex with a 17-year-old girl.
Asked what he would do in the future in the La Stampa interview, he said he could "help out in election campaigns, something I've always been good at."
Or he added: "Maybe I will go back to being president of AC Milan."