Uncertainty around Italian coalition ahead of Senate vote

Italian President Giorgio Napolitano (L) discuss with EU Commission President Jose Manuel Barosso (R) before a family photo during the celebration of the accession of Croatia to the European Union at St. Mark's Square in Zagreb June 30, 2013. REUTERS/Antonio Bronic (Reuters)

By Paolo Biondi ROME (Reuters) - The uncertainty that has weighed on Italian politics for weeks continued on Friday, with allies of Silvio Berlusconi playing down the risk of a crisis that could topple Prime Minister Enrico Letta's fragile coalition government. Angelino Alfano, secretary of Berlusconi's People of Freedom party (PDL), welcomed a statement from President Giorgio Napolitano on Thursday in which the head of state said he expected Berlusconi to continue supporting Letta. "President Napolitano's confidence in Berlusconi is well placed," Alfano said in a message posted on Twitter. The PDL has alternated between offering support to Letta and threatening to bring his government down ever since Italy's top court confirmed a verdict last month convicting Berlusconi of tax fraud and sentencing him to a four-year jail term. On Thursday, one of the 76-year-old billionaire's most loyal lieutenants said he had already recorded a video in which he could announce his withdrawal from the unwieldy coalition of left and right formed after deadlocked elections in February. The growing tension prompted Napolitano, who would have to decide whether to order new elections in the event of a government collapse, to warn that a crisis would expose Italy to "extremely serious risks". "I read Napolitano's remarks very positively. I see it as a 360-degree call for responsibility," the PDL parliamentary floor leader in the lower house, Renato Brunetta, told reporters at the margins of a conference in Cernobbio, outside Milan. A special cross-party Senate panel that will vote on whether to begin proceedings to expel Berlusconi from parliament begins meeting on Monday although it may be several weeks before the process is complete. Letta's centre-left Democratic Party (PD) insists it sees no margin for flexibility and will vote to strip Berlusconi of his seat, while the PDL says that the law under which he could be forced out should not apply because it was passed after the events over which he was convicted. The political ructions have caused growing nervousness on financial markets and reawakened memories of the turmoil which saw Berlusconi's last government driven from power at the height of the euro zone crisis in 2011. "There are so many things that need to be done. We need an Italy that is stable in political, economic and financial terms," Letta said at a news conference after the meeting of the Group of 20 economic powers in St Petersburg. TRAUMATIC Uncertainty about Berlusconi's intentions has left even close supporters perplexed and added to unease in his party, which is split between hardliners pressing him to bring down the government and moderates looking for an arrangement that would avoid a crisis. Whatever the decision of the Senate committee, the media tycoon faces at least a temporary ban from politics in the wake of his conviction. His sentence has been commuted to one year's house arrest or community service but he would not be able to participate in active politics during that time. "Berlusconi knows that within a month, he won't be able to operate in politics, he can't be a candidate, whatever the result of the senate committee vote," one PDL parliamentarian, speaking on condition of anonymity, told Reuters. "He still has the possibility of a final political gesture. He can decide to throw over the table and cause a government crisis, pushing for a traumatic election or he could do something just as dramatic by retiring from politics of his own accord," the parliamentarian said. Napolitano has made it clear that he does not want a return to the ballot box less than a year after the inconclusive February election, on the grounds that a new vote would simply produce more deadlock. The PDL is pressing for a delay on any decision about expelling Berlusconi until the constitutional court decides on whether or not the law under which he could be stripped of his seat can apply to his case. The party wants to overturn the law, named after former Justice Minister Paola Severino, which declares that politicians convicted of serious offences cannot remain in parliament but the PD has so far resisted calls for a delay. (Writing by James Mackenzie)