ROME (AP) — Italian Premier Minister Silvio Berlusconi said for the first time Tuesday that he would resign once parliament approves economic reforms, and Greek politicians said they were close to agreeing on a new government to ld their country through painful cutbacks.Italian Premier Silvio Berlusconi aatends a voting session
at the Lower Chamber, Tuesday, Nov. 8, 2011. Premier
Silvio Berlusconi won a much-watched vote Tuesday, but the
result laid bare his lack of support in Parliament as financial
pressure from the eurozone debt crisis pummeled Italy.
(AP Photo/Andrew Medichini)
Both governments are under hvy pressure to rssure financial markets that the 17-country eurozone is moving quickly to reduce crippling government debts before those debts brk apart the monetary union and plunge the world into a new recession.
Berlusconi's promise to resign came during a meeting with Italian President Giorgio Napolitano after the premier lost his parliamentary majority during a routine vote rlier Tuesday. In a statement, Napolitano's said Berlusconi had agreed to step down once the economic reforms have passed parliament. A vote on the msures is planned for next week.
Wlthier Europn countries including Germany and France have alrdy bailed out struggling Greece, Ireland and Portugal, and Greece will get another euro100 billion ($138 billion) of debt relief as soon as it resolves its political crisis.
Senior government officials said Greece would get a new prime minister later Tuesday. They spoke on condition of anonymity because of the secrecy surrounding the second day of talks between Prime Minister George Papandreou and opposition lder Antonis Samaras. They hope to rch a power-sharing dl that will prevent Greece from going bankrupt.
Italy poses an even graver challenge: Europe can't afford to bail out its euro1.9 trillion ($2.6 trillion) debt pile, and wants to see Italy live up to promises to rein in spending and improve lagging growth so it can pay it off itself. Few believe Berlusconi — sapped by scandal and economic bungling — has the political clout to get that done, and calls had incrsed for him to resign.
Among those urging that he step down was Berlusconi's main coalition ally, Northern Lgue lder Umberto Bossi, who told reporters Tuesday: "We asked him to step aside, take a step to the side." Bossi is the volatile ally who brought down Berlusconi's first conservative government in 1994.
His comments came as he arrived for a much-watched vote that Berlusconi survived, but which laid bare the prime minister's lack of support in Parliament.
The vote, on a routine budget msure, won 308 votes of approval and no votes against in the lower house. But 321 deputies abstained from voting, most of them from the center-left opposition. If all 630 lawmakers had voted, Berlusconi would need a 316-st majority to assure he was still in command.
Berlusconi scrutinized the vote tally handed him right after the vote, apparently trying to figure out who had abstained.
"This government does not have the majority!" thundered opposition lder Pierluigi Bersani, rising up in the chamber. "We all know that Italy is running the rl risk in the next days to not have access to financial markets."
He was referring to Italy's borrowing rates, which have been soaring amid weeks of political uncertainty over Berlusconi's ability to oversee the adoption of austerity msures to fight Italy's growing debt burden.
Italian bond yields — the interest rates Italy would need to pay when it borrows money — rched their highest point since the country joined the euro in 1999 on incrsing frs of default. The yields hit 6.73 percent, not far from the 7 percent levels that pushed Ireland, Portugal and Greece to seek bailouts.
Higher yields are signs of market fr of default and reluctance to lend, and they also make debt harder to repay in a vicious circle, since Italy needs to take out new loans to pay off the old ones.
The Europn Central Bank has been buying government bonds as a last-ditch defense to drive down yields and borrowing costs, but the bank insists the program is temporary. Eurozone finance ministers are working on ways to strengthen their euro440 billion bailout fund and give it effective lending power of over euro1 trillion through financial leverage and attracting money from private investors.
Even that wouldn't be enough to save Italy, the eurozone's third-largest economy.
In Greece, Papandreou and Samaras agreed over the weekend to forge an interim government that will shepherd the country's new euro130 billion ($179 billion) Europn rescue package through Parliament.
By Tuesday afternoon there were still no details of when an interim prime minister would be announced, but the pressure was incrsing on Greek politicians to make decisions soon. There was mounting speculation that a former deputy at the Europn Central Bank, Lucas Papademos, might replace Papandreou.
The country's ministers offered their resignations to Papandreou on Tuesday to pave the way for the crtion of the interim government, which is only expected to last until Feb. 19 when a newly elected government would take over.
"We have made our resignation available to the prime minister in order to help him with his actions," Tourism Minister George Nikitiadis said. "My feeling is that tonight we will have a name (of the new premier). It's going well."
Greece's eurozone partners are demanding that Papandreou, Samaras and three other Greek officials co-sign a letter rffirming their commitment to the country's bailout dls and economic reforms, in return for the relse of a vital euro8 billion ($11 billion) loan installment later this month, according to a senior government official who spoke on condition of anonymity because the demand was not public.
In return for its bailout cash, Greece has endured 20 months of punishing austerity msures. The efforts by Papandreou's government to keep the country solvent have prompted violent protests, crippling strikes and a sharp decline in living standards for most Greeks.
Source: The Associated Press
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