Tuesday, December 14, 2010

Berlusconi's Government Wins Its Confidence Vote

The center-right Government of Italian Prime Minister Silvio Berlusconi won its confidence vote in both houses of Parliament. The lower house today gave its confidence to Berlusconi's government by a 317-314 margin. The vote was sought by the Speaker of Parliament who had split with Berlusconi's People of Freedom Party.

The vote avoids a resignation by the Premier and the formation of a caretaker government. Instead, Berlusconi will be able to try to form a coalition with the Union of Christian and Center Democrats (UDC), a centrist Catholic Party that was a former partner in his previous government. The UDC had joined the opposition on the confidence vote. Failing a coalition with the centrists, Berlusconi would call elections, likely after the federalist reforms demanded by his major coalition partner, the Northern League, are approved early next year.

Italian political stability reassures confidence in the European economy and the European Monetary Union. Instability was the greatest threat to Italy's economy, especially after the approval of its budget, which continues the government's austerity program. Following the bailouts of Greece and Ireland, Pressure remains most immediately on Portugal, while Spain looms as the biggest threat to Europe's economy. The Portuguese are insisting that they will not need a bailout, while Spain is under less financial strain than its Iberian neighbor, but more than Italy.

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