May 2, 2006

Italy’s Berlusconi to resign, paving way for Prodi

By Paolo Biondi

ROME (Reuters) - Silvio Berlusconi told his cabinet on
Tuesday he would tender his resignation to the president,
leaving the way open for center-left leader Romano Prodi to
form a new government.

Communications Minister Mario Landolfi told reporters
Berlusconi had announced his resignation plan to his government
team, ending weeks of defiance after losing an April 9-10
national election by a razor-thin margin to Prodi.

Berlusconi drove from the cabinet meeting to see President
Carlo Azeglio Ciampi, who could ask Prodi to form a government
by the end of this week. He will continue in a caretaker
capacity until a new administration is sworn in.

After initially contesting the election result,
Berlusconi's fate was sealed at the weekend when the new
parliament elected centre-left speakers for the lower and upper
houses, showing Prodi can control the two chambers with his
slim majority.

His resignation effectively ends a turbulent five years as
prime minister for the billionaire media-magnate who won power
promising an economic miracle but instead presided over a long
period of stagnation.

"Democracy is moving forward, sometimes a little bit slowly
but it is moving forward," Prodi told Reuters television on
Tuesday before Berlusconi's resignation. "This is an obvious
step, it is an obligation and it is necessary."


It will be up to 85-year-old Ciampi to decide whether to
start consultations this week on the formation of a government,
or to delay the move until after parliament elects a new head
of state later this month.

Ciampi, whose mandate expires on May 18, has always said
his successor should oversee the transition, but he faces huge
pressure to do it himself with credit rating agencies pushing
Italy to take swift action over its wayward public finances.

If Ciampi bows to the pressure, Italy could have a
government led by Prodi in place by the end of the week.

Prodi has promised to have a cabinet team ready by then in
case Ciampi gives him the green light, and on Tuesday he said
he hoped "the absence of a government does not go on for long."

Prodi's coalition, ranging from old school communists to
Roman Catholic moderates, won the April election by the
smallest margin in modern Italian history.

Berlusconi denounced widespread irregularities in the vote,
but Italy's Supreme Court sanctioned the count and said any
further complaints should be reviewed by the new parliament.

Prodi, a former European Commission president, has stressed
that Italy could give the world and markets a sign of stability
if his government gets down to business quickly.

If Ciampi, a former central bank governor, refuses to
oversee the transition then parliament might decide to speed up
the election of the new president, originally scheduled for May
12-13 to try to get a new government in place more quickly.