Berlusconi Verdict Undermines Stability Of Enrico Letta’s Ruling Coalition

The Italian Supreme Court’s verdict, on Thursday, against former Prime Minister Silvio Berlusconi over his involvement in tax fraud has put the country's coalition government in jeopardy, as the ruling intensifies the divide between Berlusconi’s center-right People of Freedom party, or PDL, which is part of the coalition, and Prime Minister Enrico Letta’s center-left Democratic Party, or PD.

However, Italy’s financial markets, on Friday, remained largely unaffected by the court’s ruling, indicating that investors did not see much of a threat to the government’s stability. But shares of Italian broadcaster, Mediaset, which is owned by Berlusconi, may experience volatility during Friday's trading session as a result of the verdict, Reuters reported citing analysts.

“There'll be a lot of speculation today. My feeling is the shares will fall at the start, though some investors will be looking at whether the decision could prompt him to sell the group,” a Milan trader told Reuters.

The verdict upholding Berlusconi’s conviction for dodging taxes by inflating invoices at Mediaset is seen as a severe blow to Italy’s longest-serving post-war leader.

“His conviction is like the fall of the Berlin Wall in 1989,” Beppe Grillo, leader of the anti-establishment Five Star Movement and a critic of Berlusconi, said, according to a Reuters report.

However, lawmakers belonging to PDL said, on Friday, Berlusconi’s status as the party leader will not be affected by the court’s verdict.

“Berlusconi will continue to be our point of reference outside parliament,” PDL politician Renato Brunetta said, according to Italian media reports.

PDL lawmaker Gabriella Giammanco said: “Berlusconi remains our undisputed leader, despite an unjust sentence that pains us profoundly.”

Berlusconi, in a televised address following the verdict, on Thursday, said he will re-launch his original political movement, Forza Italia, and urged Italians to elect it to parliament, but did not make any direct reference to PDL’s association with Letta’s government.

Nitto Palma, who served as justice minister in Berlusconi’s cabinet, said the ruling would not have much impact on the ruling coalition.

“This sentence will not affect the Letta government, which was created to serve the country and which will continue to serve it as far as we are concerned,” Palma said, after a meeting at Berlusconi’s residence in Rome, according to Reuters.

Some observers say that internal differences in Letta’s own party pose a greater threat to his government’s stability, as many PD lawmakers are displeased with their party’s association with Berlusconi’s party and could now turn against the prime minister.