Berlusconi wins Senate vote, lower house uncertain

Italian prime minister clears first hurdle but his greater political challenge, in winning the support of Italy's lower house, remains.

ROME // Italian Prime Minister Silvio Berlusconi won a confidence motion in the Senate as expected on Tuesday, ahead of a lower house vote that could force him to resign or leave him clinging on to a wafer-thin majority.

The centre-right government's secure majority in the upper house meant there was little doubt about the vote on a confidence motion it had called itself to underline its legitimacy. The government won by 162 votes to 135.

Shares in media company Mediaset, controlled by Berlusconi's family, recovered ground and turned positive after the initial vote.

But the result was just the first round in a showdown that will climax with a no-confidence vote in the lower house expected around 1230 GMT.

After a year overshadowed by corruption and sex scandals and an acrimonious split with former ally Gianfranco Fini that cost him a secure parliamentary majority, a day of reckoning has arrived for Berlusconi after two and a half years in power.

The 74-year-old media tycoon has repeatedly defied the sceptics, shrugging off a string of gaffes and scandals to win three elections and transform Italy's political landscape since gaining power for the first time in 1994.

If he loses in the lower house, he will have to resign, leaving President Giorgio Napolitano to name a new government or call elections more than two years before they are due in 2013.

After a fevered campaign of back room deals, in which opposition accusations of vote-buying and corruption have been answered by fierce denials and counter-accusations of treachery, many commentators estimate the government may just have the numbers to scrape through.

Berlusconi exuded his trade mark confidence before the lower house vote. Asked if he would win, he told reporters: "Yes, I think so".

There are 630 deputies in the lower house and Berlusconi in theory needs 316 votes to be sure of victory. But the real number may be smaller due to abstentions or the absence of a heavily pregnant member of the opposition Democratic Party.

Riot police blocked off the centre of Rome to keep back expected protests by thousands of students and other government opponents.

Even if it wins the vote, the government's longer-term prospects remain extremely uncertain and a tiny majority would leave it unable to pass major reforms, seen as essential for recovery from recession.

"Either there are the conditions for continuing in government with a solid majority or it would be better to go to an election," Interior Minister Roberto Maroni, a senior member of Berlusconi's Northern League coalition allies told reporters.

Former anti-corruption judge Antonio Di Pietro, who now heads the opposition Italy of Values party, said in parliament:

"Whatever the result of the vote you have bought, one thing is clear. You (Berlusconi) do not have a political majority that would allow you to govern."

"Whether you like it or not, you have reached the end of the line for your political experience," he said.

Tuesday's vote is being closely watched by financial markets on high alert over the euro zone debt crisis, and a prolonged period of doubt or a divisive election campaign could turn the spotlight on Italy's strained public finances.

"Political uncertainty will only be dissipated in case of a clear majority," analysts from Italian bank UniCredit wrote in a morning research note.

Italy has one of the heaviest public debt burdens in the world, at almost 120 percent of gross domestic product. But it has largely escaped the euro zone debt storm thanks to tight control of spending and a conservative banking system that avoided excess during the market boom.

Markets were reassured last week when the 2011 budget was passed in parliament ahead of the votes, but politicians on all sides are acutely aware of the danger of euro-contagion and Berlusconi warned on Monday that it would be irresponsible to risk a crisis now.

A sharp jump in the premium investors demand to hold Italian debt rather than benchmark German bonds last month underlined the risk, although the interest rate spread has since come back from the record levels it hit on November 30.