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Sicilian vote, Berlusconi threat add to Italy uncertainty

MYT 9:25:01 PM

ROME (Reuters) - Former Italian premier Silvio Berlusconi faced a fresh setback on Monday as early counting in a local election in Sicily showed his divided centre-right party trailing in a former stronghold and big gains for the anti-establishment 5 Star Movement.

Members of a local electoral commission count ballots at a polling station after regional elections in Palermo October 29, 2012. REUTERS/Massimo Barbanera
Members of a local electoral commission count ballots at a polling station after regional elections in Palermo October 29, 2012. REUTERS/Massimo Barbanera

The election for a regional government in Sicily is a major test ahead of a national poll in April but the picture has been confused by Berlusconi's weekend attack on Prime Minister Mario Monti's government.

As counting got under way following the vote on Sunday, centre-left candidate Renato Crocetta said he was leading in several constituencies, although results from key centres including the eastern city of Catania remained to be counted.

Turnout was low, with almost 53 percent of voters staying away while the 5 Star Movement led by fiery comic Beppe Grillo appeared to have built on its success in local elections in May, reinforcing its position as a prime vehicle for voter anger.

With some 10 percent of ballots counted, Crocetta had 31.8 percent of the vote for regional governor, ahead of the centre-right candidate Nello Musumeci on 26 percent, 5-Star candidate Giancarlo Cancelleri on 16.6 percent and Gianfranco Micciche, a conservative who split from Berlusconi's camp, on 15.8 percent.

A deep recession, repeated tax hikes and spending cuts and a wave of lurid political scandals have created a mood of deep disillusion among voters who have turned away from mainstream parties and contributed to Grillo's spectacular rise.

Berlusconi's angry attack on Monti's technocrat government, which his centre-right People of Freedom (PDL) has supported in parliament for almost a year, underscored the political confusion ahead of next year's national vote.

The billionaire former prime minister, convicted of tax fraud last week, attacked Monti's austerity policies on Saturday, announcing that the PDL may withdraw its support and bring the government down.

That threat, just days after he had announced he would not lead the centre-right in the election, has deepened divisions in the PDL between Berlusconi loyalists and a more moderate, pro-Monti wing which wants to rebuild the centre-right.

"The Monti government guarantees the credibility of Italy," former foreign minister Franco Frattini, who is prominent in the moderate faction, told the Corriere della Sera daily on Monday.

He said he hoped the PDL leadership would decide "with a broad consensus" to maintain its year-long backing for Monti's unelected technocratic government in parliament.

TEST IN SICILY

Monti himself, who will not be running in next year's election, has kept silent on Berlusconi's abrupt change of course but is due to hold a news conference at 2:30 p.m. (1330 GMT) in Madrid with Spanish Prime Minister Mariano Rajoy.

Berlusconi was forced to step down and make way for Monti almost exactly a year ago at the height of a financial crisis which drove up Italy's borrowing costs and threatened to push its huge public debt out of control.

Markets reacted nervously to the prospect of uncertainty in the euro zone's third largest economy and yields on Italy's 10-year government bonds hovered just under five percent, 349 basis points over the yield of benchmark German Bunds.

Earlier this month, helped by the European Central Bank's pledge of strong action to combat the crisis, that spread had narrowed to as little as 313 basis points, or 3.13 percent.

PDL secretary Angelino Alfano, 41, has been expected to lead a post-Berlusconi renewal of the party, but his credibility has been severely strained by his patron's repeated intervention and the Sicilian vote is a key test of his ability to lead.

Sicily, a byword for wasteful and corrupt administration, has an unemployment rate almost twice the national average and the island's economy has suffered badly in Italy's recession.

The PDL lags in national opinion polls behind the centre-left Democratic Party (PD) and the 5 Star Movement. A poor showing in Sicily would exacerbate the already severe internal tensions which Alfano has struggled to contain.

The former justice minister, a Sicilian widely seen as a moderate, has been favourite to win a primary election for the PDL leadership in December, but that could change if the Sicilian vote goes badly.

(Editing by Barry Moody and Alastair Macdonald)

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