INSIGHT - Berlusconi struggles to keep party united after revolt

By Paolo Biondi, Giselda Vagnoni and James Mackenzie

ROME (Reuters) - When Silvio Berlusconi set out to end Italy's government last month, he didn't consult the national secretary of his People of Freedom Party. Nor was the party's secretary Angelino Alfano asked whether he wanted to resign as deputy prime minister of the coalition government; he was told to.

This government "is up to no good. It only wants to raise taxes," a Berlusconi aide told Alfano by phone on the Saturday afternoon of September 28, according to a person close to the deputy premier. The aide said Alfano and the four other ministers of Berlusconi's People of Freedom Party (PDL) had to step down immediately.

Alfano, who declined to comment for this article, did resign, jolting financial markets and reviving memories of the moment in 2011 when Italy almost succumbed to the euro zone debt crisis. But the phone call also triggered a mutiny among Berlusconi's most senior lieutenants that thwarted his attempt to topple the government.

Coupled with a likely ouster from parliament after a criminal conviction, the rebellion has left the 77-year-old Berlusconi facing the most serious challenge to his authority in 20 years and is pushing Italy's most dominant post-war leader into the sunset of his career, friends and colleagues say.

"Berlusconi thought his people would stand up for him. But they didn't," Umberto Bossi, leader of the separatist Northern League party said in an interview. Bossi said it's too early to write Berlusconi off. But he added that his longtime friend and former political ally is "not what he was before."

The revolt - the details of which Reuters has pieced together after interviews with two dozen politicians and aides who were directly involved - is now giving rise to what many say is a long overdue power struggle for the future of Italy's conservative forces. For Alfano - a 42 year-old Sicilian lawyer who was long been Berlusconi's anointed successor, but who few considered strong enough to lead the party - the coup is a chance to set his own stamp on a new conservative political group.

Whether Alfano will succeed is by no means certain. He has neither Berlusconi's millions nor his proven electoral appeal, shown most recently in February's elections, when the media mogul converted what looked at one point like a likely wipeout into a share of government.

Yet Berlusconi himself is worried about his future, people close to him say. For his tax fraud conviction, he faces a year of house arrest or community service and once out of parliament, he loses legal immunity and could be arrested at any time. Berlusconi declined to comment for this article.

For the first time in many years, the PDL also faces a potentially formidable opponent - Matteo Renzi, the 38-year-old mayor of Florence who is bidding to head Italy's center-left Democratic Party and whose popular appeal and communication skills rival Berlusconi's.

During a recent lunch of mushroom crepes and Baba dessert with PDL politicians, Berlusconi recounted a warning he had received from Russian President Vladimir Putin, a longtime friend of the former Italian premier. "You will end up like Tymoschenko," Putin said, according to a person present, referring to jailed Ukrainian opposition figure Yulia Tymoshenko.

NEW REALITY

Since Berlusconi created his Forza Italia party, as it was originally named, in 1994, the movement has never developed a strong alternative leadership to challenge its founder.

Earlier this year, Berlusconi's sway with Italy's conservative electorate was reasserted when the PDL gained far more votes than expected in the February elections. It was a strong enough showing to force Italy's centre-left Democratic Party, the winners, to have to share power with the PDL in the awkward coalition government led by Prime Minister Enrico Letta.

The makeup of the alliance - formed last April - sowed the seeds of the crisis that rocked Italy last month. By the summer, Berlusconi fretted that his conservative party might face a backlash for being part of a government that needed to keep Italy's finances in check, in part by raising taxes. Party hawks had been urging him to pull the plug and go to elections.

Then, in August, the tax fraud conviction left Berlusconi vulnerable to being ousted from parliament.

After the ruling, the PDL stood united behind Berlusconi in public. But in private, the conviction created a rift within the party. Loyalists who felt their future political careers depended on Berlusconi circled more tightly around their former premier, joining the hawks who were agitating to fell the coalition government, insiders say.

Those who felt they had a political future in a conservative party even wihtout Berlusconi took a more sanguine attitude and became so-called doves, more reluctant to criticise the coalition government, the insiders add.

Berlusconi himself became increasingly impervious to warnings that Italy could not afford a government collapse with its economy in deep recession and financial markets on alert for any sign of weakness, people close to him say.

On the Saturday afternoon of September 28, Berlusconi told several aides that he wanted to end the government because he was angry about a planned increase in Italy's sales tax. But according to several people close to both Alfano and Berlusconi, the underlying reason was the tax fraud conviction.

Alfano shared Berlusconi's belief that leftist opponents were exploiting the tax conviction to end Berlusconi's political future once and for all, according to these people. But Alfano didn't feel this was enough reason to bring down the government. Opinion polls were showing little appetite for an election. When Alfano received the call from Niccolo Ghedini, Berlusconi's longtime lawyer who is also a PDL senator, telling him to resign, Alfano felt his mentor was hanging him out to dry.

"Before then, Alfano always felt that he was Berlusconi's successor. But this time, he felt his position was in danger. It was a question of his own survival," said a person close to Alfano.

Alfano quickly arranged a meeting at his house with other PDL ministers. They decided to comply with Berlusconi's order to resign, as a show of loyalty to the party founder, according to people with knowledge of the meeting. But they also planned to let the public know that they were not happy about it.

The ministers' resignation meant the government no longer had the support of one of its two key parties and hence was essentially dead. Letta, who had just returned from a trip to New York, would have to call a confidence vote in parliament to ascertain whether there was any chance his government could proceed.

But by Sunday and Monday, it was clear the PDL was on thin ice too. Alfano himself issued a statement saying he was "diversamente Berlusconiano," or "a different kind of Berlusconian" - a way of distancing him from party hawks like Ghedini.

SHOWDOWN

By late Monday, some 20 senators had rallied around Alfano and decided they were going to defect and vote in favor of the Letta government during the confidence vote, according to people involved in the discussions. That would be enough to tip the balance in the upper house, where the decisive showdown would take place.

For two days Berlusconi wavered, torn between the defectors and hardliners, according to people close to the premier. On Wednesday morning, just as he entered parliament, the former premier realized he could not stop Letta from winning the vote. His goal became to try to hold the party together, they added.

As the debate wound up, Berlusconi stood up in the Senate and announced that "not without some internal strife", he would support the government. Amid a mix of applause and jeers, Berlusconi sat down and put his face in his hands.

"It was an absolute shock. We were told 5 minutes before," that Berlusconi had decided to support Letta, said an aide to one of the most senior PDL figures.

WRANGLING

Today, the party hierarchy is doing its best to suppress any signs of division. The PDL's parliamentary whip sent out a letter to all lawmakers this week with clear instructions: "There are different visions for the future but there is one certainty for everyone - the charismatic leadership of Silvio Berlusconi, whose order to remain united should be followed without ifs and buts."

Many in the PDL believe Berlusconi and Alfano will try to patch things up in order to keep the party together. Yet others within the party are agitating for a change in leadership. Former Regional Affairs Minister Raffaele Fitto and the mayor of Verona Flavio Tosi have both indicated they are ready to challenge Alfano to take over the centre right. Marina Berlusconi, the former prime minister's 47-year old daughter is also a possible successor if she decides to enter politics, people close to the former premier say.

Fresh from the coup, Alfano now has the best chance to win over a party long used to its domineering leader, friends and colleagues say. But it won't be without further internal struggles, insiders say.

"If things head towards replacing Berlusconi with Alfano," said one ministerial aide involved in the discussions within the PDL, "it will be a revolution."

(Reporting by Paolo Biondi, Giselda Vagnoni and James Mackenzie. Editing By Alessandra Galloni and Janet McBride)

Matches

MORE TOP STORIES TODAY

On Now: Chennai Super Kings vs Delhi Daredevils

On Now: Chennai Super Kings vs Delhi Daredevils

IPL7, MATCH 8—Chennai bat. Hilfenhaus, Manhas, Ishwar in; Delhi unchanged. More »

Bowling worries for Super Kings

Bowling worries for Super Kings

After failing to defend a mammoth 205 against Kings XI Punjab, Chennai have a lot to think about. More »

T20 test for Cheteshwar Pujara

T20 test for Cheteshwar Pujara

The class act from Saurashtra may have to rethink his approach to the mannerless format. More »

Punjab pull off another big chase

Punjab pull off another big chase

GAME 7, SHARJAH—Maxwell, Miller, Pujara chase down Rajasthan's 192. More »

BCCI reputation lowest in 80 years: Manohar

BCCI reputation lowest in 80 years: Manohar

The former BCCI president says he was "disillusioned" by the happenings at the emergent working committee meeting on Sunday. More »

Special meeting to replace Srinivasan

Special meeting to replace Srinivasan

The BCCI is likely to convene a special general body meeting (SGM) in May to replace N Srinivasan on the board's disciplinary committee. More »

Shastri in proposed IPL probe panel

Shastri in proposed IPL probe panel

Some members stressed on the need for proposing names with an "impeccable record and clean image". More »

Roach escapes injury after car crash

Roach escapes injury after car crash

The West Indies fast bowler lost control of his BMW sedan due to slippery road conditions in his native Barbados on Saturday. More »

Repose faith in Indian coaches

Repose faith in Indian coaches

All of them cost plenty of dollars which I feel is unnecessary for a two- month tournament, says former cricketer Yajurvindra Singh. More »

Panel can help clean mess: Raghavan

Panel can help clean mess: Raghavan

The former CBI Director is one of the three candidates proposed by the BCCI to head the enquiry into the IPL betting and spot-fixing scandal. More »

Cook relieved after period in limbo

Cook relieved after period in limbo

The England captain is looking forward to a fresh start after a dispiriting Ashes defeat last year. More »

[INTERVIEW] Jayawardene and Sangakkara

[INTERVIEW] Jayawardene and Sangakkara

Mahela Jayawardene and Kumar Sangakkara go over their World T20 win, and feel grateful to have fans whose support remains unwavering in victory and de… More »

Need to improve fielding: Ashwin

Need to improve fielding: Ashwin

[T20 Newsline] Lacklustre Super Kings, fast-improving Sanju Samson and other news from IPL-7. More »

Aussie coach joins emerging Afghanistan

Aussie coach joins emerging Afghanistan

Peter Anderson has started work in Kabul as the fast-developing team prepare for their debut at next year's World Cup. More »

Chaos threatens to engulf SL again

Chaos threatens to engulf SL again

As Lanka's head coach decides to jump ship, euphoria over winning an ICC tournament has dissipated into fuistration. More »

Jayasuriya unhappy at Farbrace conduct

Jayasuriya unhappy at Farbrace conduct

Sri Lanka's chief selector is upset at news of head coach Paul Farbrace's possible move to England. More »

Have nothing to prove to anybody — Sehwag

Have nothing to prove to anybody — Sehwag

The Nawab of Najafgarh says a good run in IPL could help his chances of a comeback on India's tour to England in June. More »

Duminy steals first win for Delhi

Duminy steals first win for Delhi

Furious fifties by Duminy and Dinesh Karthik end a long losing streak for the Daredevils. More »

Five things England must do to bounce back

Five things England must do to bounce back

England have appointed a new head coach in Peter Moores. More »

AB, Parthiv seal Bangalore's second win

AB, Parthiv seal Bangalore's second win

Royal Challengers overcame a stutter to cruise to the small target they were set by Mumbai Indians. More »

‘Felt like helpless minority’

‘Felt like helpless minority’

Former BCCI treasurer Ajay Shirke says emotions got the better of Srinivasan and he tried to oversimplify things by calling Meiyappan an “enthusiast.” More »

Royal test for Kings

Royal test for Kings

Preview — Clash of philosophies between Australia-centric teams More »

No way back for Pietersen: ECB

No way back for Pietersen: ECB

Kevin Pietersen's hopes of reviving his international career appeared to end Saturday when ECB managing director Paul Downton said there was 'no way back'… More »

The world record that nearly wasn't

The world record that nearly wasn't

Twenty years ago this week, Brian Lara became Test cricket's highest scorer, but he almost didn't make it. More »