Berlusconi Coalition Starts to Unravel

Silvio Berlusconi's government, which has survived for longer than any in Italy since the war, was last night teetering on the brink of collapse after deep divisions emerged among his allies.

Behind the crisis lay growing alarm within the ruling coalition about Italy's dismal economic performance and the conservative government's vulnerability to claims that it is discriminating against the already poorer south. A general election has to be held by next spring and, if the results from regional ballots this month were to be repeated, the right would be swept from power.

A meeting in Rome of the leaders of the parties supporting Mr Berlusconi's coalition broke up in disarray amid reports that one of the main groups was about to withdraw its backing.

The leader of the conservative Christian Democrats, Marco Follini, indicated his party's continued support depended on Mr Berlusconi committing himself to a complete overhaul of the government's programme.

"We are asking the [parliamentary] majority to take a gamble on ... change," he said.

Yesterday's meeting had been called to discuss how the government and its supporters could recover from the savaging they endured in this month's regional polls.

Mr Berlusconi argued for a limited cabinet reshuffle and a substantially unaltered programme, but ran up against resistance from both the Christian Democrats and the second-biggest party in government, the formerly neo-fascist National Alliance.

Gianfranco Fini, the foreign minister and leader of the National Alliance, called on Mr Berlusconi to seek a renewed vote of confidence from parliament with a programme that included measures to help the south and boost industrial competitiveness.

This week has seen the government come under attack from inside and outside the country over its handling of the economy. On Monday Italy's employers' federation said the government should call an early election if it was unable to take steps to revive the waning economy.

Two days later the European commission warned it would begin formal action against Italy before the end of June because of its rising budget deficit. Yet, far from taking steps to reduce spending or boost revenue, Mr Berlusconi plans to woo voters with a €12bn (£8.2bn) round of tax cuts.

This is a concern for the Christian Democrats and Mr Fini's National Alliance, especially since two earlier rounds of tax cuts failed to win over the electorate. They are also worried about a constitutional reform giving greater freedom and resources to the north.

At the regional elections on April 3 and 4, Mr Berlusconi's chief opponent, the former European commission president Romano Prodi, seized on the reform to claim that the government was bent on impoverishing the south.

The message appeared not to have been lost because rightwing governors were dumped in two southern regions, one of them a traditional stronghold of the former neo-fascists.

The constitutional reform is the brainchild of the Northern League, the only big party, apart from Mr Berlusconi's own Forza Italia movement, that remains squarely behind the prime minister.

The regional elections also saw Mr Berlusconi come under renewed attack over his overlapping roles as head of the government and media tycoon.

On Wednesday Fininvest, the company at the apex of his business empire, moved to quell opposition criticism by offering for sale a large share in its TV network, Mediaset. But though the sell-off will reduce Fininvest's holding to below 35%, analysts said they expected the Berlusconi family to retain control of Mediaset and its three TV channels.

Last night top advisers to the prime minister were called to an urgent meeting in his office in the centre of Rome.

Mr Berlusconi has been in government since 2001 when he won an outright majority in both houses of parliament.