Berlusconi in a corner as ally quits Italy Government

ROME - A junior Italian coalition party announced yesterday it was quitting the government in a move that will likely force Prime Minister Silvio Berlusconi to resign and seek a fresh mandate from parliament.

Sparking the worst political crisis of Berlusconi's four years in office, the Union of Christian Democrats (UDC) party said its four ministers would leave the cabinet and urged the prime minister to form a new administration with new policies.

Berlusconi, who is determined to serve a full five year term, has previously said he would not accept a major overhaul of his center-right coalition.

The gathering political crisis was triggered by local elections earlier this month where Berlusconi's allies lost 11 of the 13 regions up for grabs in a sign of voter discontent over months of economic stagnation.

The small UDC party said the unexpectedly heavy defeat meant the government needed a radical change of tack if it wanted to win general elections slated for 2006.

Berlusconi rejected the demand and UDC leaders decided on Friday to quit the cabinet in an effort to force him into a U-turn, said European Affairs Minister Rocco Buttiglione.

"The leadership of the UDC has approved a document to withdraw its team from the government and reiterates that the party secretary should work for the creation of a new government ... headed by Berlusconi," said Buttiglione, who is in the UDC.

The UDC indicated that if Berlusconi refused the request the party would continue to support his coalition in parliament.

The government would be unable to muster a majority in the upper house of parliament (Senate) without UDC support.

DECISION TIME

Berlusconi must now decide whether to try to forge ahead with the three remaining major coalition partners or enter negotiations with the UDC on the formation of a new administration.

Alternatively he could resign and refuse to head a new government. Italian President Carlo Azeglio Ciampi would then have to decide whether to call a snap general election or else try to put together an alternative administration.

Piero Fassino, leader of the main opposition party, the Democrats of the Left, called on Berlusconi to resign.

"The decision by the UDC to withdraw its ministers creates a political crisis that can not be hidden or disguised," Fassino said in a statement. "The prime minister must resign today."

Berlusconi made no immediate comment on the UDC decision.

The UDC's leader, Deputy Prime Minister Marco Follini, initially called for a snap election after the regional election rout, saying that would be the most "politically honest" move.

He later backed down from that but insisted Berlusconi dissolve the government and present a fresh team and policy plan to parliament in the hope of reinvigorating the coalition's standing in its last year before the scheduled general election.

After a cabinet crisis meeting on Thursday where he rejected the UDC's demands, the premier was characteristically bullish.

"I'm not afraid of crises," he told reporters. "If others betray the way Italians voted, that's not my business."

"I was elected by the majority of Italians, I am head of government thanks to a precise mandate," he said in comments reported by the ANSA news agency.

Berlusconi swept to power in 2001 at the head of a four-party coalition, promising to reform hidebound Italy. But the economy has struggled to grow during the last four years and the government's popularity has steadily declined.

- REUTERS