Silvio Berlusconi may try to stage yet another comeback to prop up a weakened Matteo Renzi if the Italian prime minister loses a referendum on constitutional reform next month, according to a senior official from Berlusconi’s party.
The former prime minister would consider helping Renzi to push a separate electoral reform through parliament if the premier stays in office despite a “No” vote on Dec. 4 and is genuinely open to working with one of his predecessors, said the official from Forza Italia, who asked not to be named discussing strategy. Renzi will need the votes of Berlusconi’s group to get electoral reform through the Senate, the official said.
Berlusconi would still press for an early election in the first months of next year and Renzi would need to be receptive to his input for the deal to work, the official added. The 80-year-old billionaire has opposed Renzi’s plan to curtail the powers of the Senate and prevent it bringing down governments, arguing it would make the premier too powerful.
An alliance between Renzi, 41, and Berlusconi would help block the path to power for the anti-establishment Five Star Movement, which is just behind the premier’s Democratic Party in opinion polls. Financial markets are nervous about the prospect of political instability after a “No” vote, and of Five Star exploiting any stumble.
Blocking Five Star
“There’s a very strong likelihood that Renzi and Berlusconi would form a pact for electoral reform,” Francesco Galietti, head of Rome-based political consultancy firm Policy Sonar, said in a phone interview. “They need to change the electoral system to make it more favorable for setting up coalitions -- that’s the only way they can keep Five Star out of power.”
The yield on Italian 10-year government debt dropped as much as 9 basis points to 1.66 percent on Wednesday on reports of a potential delay for the referendum, later ruled out by Renzi’s office.
The bond market still shows investor caution ahead of the referendum, with the extra yield investors demand to hold Italian 10-year debt instead of similarly dated Spanish bonds rising to the most in almost five years this week.
A pact with Renzi would pull Berlusconi, who underwent heart surgery in June, out of the political wilderness. His rule as Italy’s longest-serving postwar premier was plagued by allegations of misconduct, which he denied, and he was convicted for tax fraud in 2013, losing his Senate seat as a result. He spent 10 months doing community service and is currently banned from running for public office, a measure against which he is appealing to the European Court of Human Rights.
“Berlusconi is very worried about Five Star -- he sees them as a channel for all the understandably negative feelings which Italians have,” said lawmaker Deborah Bergamini, spokesperson for Forza Italia. “But when Five Star get into power, like in Rome, they show they have no understanding of government. They just quarrel among themselves for months.”
Renzi’s Promise
Berlusconi flagged his availability at a meeting with President Sergio Mattarella last month, according to the newspaper La Repubblica. Berlusconi reportedly told the head of state that “we would not automatically request the government’s resignation” if the referendum is rejected, and that Forza Italia could help to change the electoral law at least.
Mattarella’s office declined to comment, saying it did not disclose remarks made by visiting politicians. Bergamini also declined to comment on the meeting, saying it was private.
Renzi has promised to resign if he loses the vote, although he has stopped repeating the pledge in recent interviews. “I have a lot of self-esteem, some people say too much, but I’m very aware that my personal fate is worth much less than the constitutional reform which is for our children, ” Renzi told Radio 24 on Wednesday.
Andrea Guerra, a former Renzi adviser and Chief Executive Officer of Luxottica Group SpA, told newspaper La Stampa on Friday the “Yes” camp would win, and urged the premier to reshuffle his government afterward with “a new, meritocratic, agile team which is open to the world.” Guerra said Renzi had become too isolated within his Rome residence.
‘No’ Leads
Still, opinion polls indicate a narrow lead for the “No” campaign, with a survey by the Ixe institute published on Thursday showing 39 percent of voters against the reforms and 37.5 percent in favor. Mattarella would probably ask Renzi to stay on if he loses to steer through an electoral reform, according to senior officials from the premier’s Democratic Party. With a razor-thin, multiparty majority in the Senate, the prime minister will need help to get the changes approved.
Berlusconi has maintained a low profile during the campaign so far, though on Friday, he’ll preside over the departure of a motorcade of 15 iconic Fiat 500s from a villa near Monza. They are beginning a monthlong tour urging Italians to vote “No.”
“Berlusconi could become a kingmaker -- he would keep Renzi in power and give the country an electoral reform,” analyst Galietti said. “That would be reassuring for investors, because making coalitions possible is better than having different electoral systems for the lower house and the Senate, which could paralyze government.”
Renzi and Berlusconi, who controls Fininvest Spa, a Milan-based investment company, had sealed an alliance in early 2014 with objectives including the overhaul of the Senate and a new electoral law. The deal collapsed a year later after Berlusconi’s camp accused Renzi of failing to consult him on the choice of Mattarella as president.
(Updates with comment from former adviser in 13th paragraph.)
To contact the reporter on this story: John Follain in Brussels at jfollain2@bloomberg.net. To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Ben Sills, Kevin Costelloe
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