Prime Minister Silvio Berlusconi of Italy faces a key budget vote Tuesday… (Francois Lenoir, Reuters )
Reporting from Rome — Italy's beleaguered prime minister, Silvio Berlusconi, has survived more than 50 no-confidence votes and multiple accusations of criminal and sexual impropriety, including charges he paid for sex with a 17-year-old girl. But the 75-year-old billionaire may have finally met his match in the bond market.
With dwindling confidence in Berlusconi's ability to manage Italy's affairs — and the Eurozone's debt crisis hanging in the balance — investors Monday pushed up Italian bond yields to a euro-era high of 6.63%. That means higher borrowing costs, and takes the yield ever closer to a point that tipped Greece, Ireland and Portugal over the edge and seeking financial rescue.
But that's not all that has Berlusconi in the toughest fight of his long political life. He faces a key budget vote Tuesday that could show he has lost majority backing in Parliament. And international pressure seems to be mounting by the day as European officials increasingly view Berlusconi as an obstacle to resolving the region's debt crisis.
Speculation of Berlusconi's imminent resignation was rampant Monday, as camera crews lingered outside the Parliament building here in the capital as if on a political death watch, especially after one of his close advisors, newspaper editor Giuliano Ferrara, wrote online that "Berlusconi is going to resign, it's a matter of hours."
Berlusconi denied reports Monday that he intended to step down, but he is finding less and less room to maneuver.
European leaders at the Group of 20 summit Friday essentially forced Berlusconi to accept monitoring of the country's finances and economic reforms by the International Monetary Fund. And on Monday, Eurozone finance ministers and officials, meeting to discuss the region's debt drama playing out in Athens and Rome, expressed concerns about events in Italy.
"I think that the situation in Italy is quite serious," said Finland's finance minister, Jutta Urpilainen.
Other officials insisted Italy did not face the same challenges as Greece, complaining that financial markets were moving from one target to another to test the determination of countries to defend the Eurozone.
"In Greece the developments are cataclysmic," said German Finance Minister Wolfgang Schaeuble. "Every day, a new situation."
But, he added, "Italy is not in a comparable situation. The real numbers from Italy do not justify the nervousness in the markets."
The bailout of Greece was designed in large part to ensure that its troubles did not spread to larger economies such as Italy, where default could cause severe damage to the broader European and global economies.
Indeed, the reaction from financial markets adds to "strong pressure for Berlusconi to resign," said Sergio Fabbrini, political science professor at the LUISS Guido Carli university in Rome.
"He is completely isolated," Fabbrini said, noting that the prime minister had lost the support of business leaders, the Roman Catholic Church, the European establishment, and, possibly by Tuesday, his coalition in Parliament.
Berlusconi, who was in Rome over the weekend rather than in Milan, where he typically spends such days off, was said to be working to sway parliamentary members who have found it increasingly difficult to keep backing the leader of the center-right party.
Mario Baldassarri, an MIT-trained economist and former vice minister of economy and finance in Berlusconi's administration, said he didn't see how Berlusconi could hang on for very long given the multiple internal and outside forces weighing on him.
Back in August, Baldassarri said, he thought it would be just weeks before Berlusconi stepped down. But 10 days ago, he said Monday, "I started to say days."