Sun, Jul 04, 2004 - Page 6 News List

Berlusconi to take over economy after minister quits

TWO HATS There had been speculation that the Italian prime minister's right-hand man might soon find himself on the way out, and a rancorous meeting did the trick

REUTERS , ROME

Italian Economy Minister Giulio Tremonti has resigned from Prime Minister Silvio Berlusconi's cabinet following a stormy meeting with coalition allies, a government source said yesterday.

His shock decision to quit the cabinet came after weeks of infighting within the coalition over economic policy that has threatened to tear apart the center-right administration.

The source said Berlusconi had decided to take over the economy portfolio on an interim basis just three days before EU finance ministers are due to gather in Brussels to discuss worries about Italy's growing budget deficit.

"Tremonti has resigned. The meeting tonight went badly," said the source, who declined to be named.

"Berlusconi will take over as economy minister for the time being," he said, adding that a cabinet meeting called for later yesterday to discuss Italy's budget problems had been cancelled. Sources said it would probably be held yesterday.

Tremonti left Berlusconi's Rome residence shortly after midnight and did not talk to reporters.

Tremonti is a member of Berlusconi's Forza Italia party and has been a central figure in his 3-year-old government, managing thus far to meet strict EU budget rules but failing to oversee a long-promised revival in Italy's persistently sluggish economy.

He and Berlusconi were "intertwined," so much so that his replacement "would be akin to an act of surrender by an already weakened premier," the newspaper Corriere della Sera wrote in a recent editorial amid speculation about his future.

Some coalition allies, especially the conservative National Alliance (AN) party, have viewed the powerful Tremonti with open suspicion, often criticizing him for not consulting more widely before announcing major economic decisions.

Roberto Calderoli, a leading figure in the coalition Northern League party, told reporters early on Saturday that Tremonti had not yet handed in an official resignation letter, but said that this would probably come shortly.

The populist League has previously defended the economy minister from AN attacks and has threatened on at least one occasion to quit the government should Tremonti go.

But Calderoli played down the prospects of a full-blown political crisis over the issue. "A government crisis?

"No, if you substitute a minister, there's no crisis," he said.

By contrast, one of the other coalition partners told Berlusconi late Friday that they would bring down the government if Tremonti stayed in office, said Calderoli, who was present at the meeting.

He did not name the party, but only hours earlier, deputy prime minister and AN leader Gianfranco Fini had said he would pull his forces out of the fractious government if economic policy didn't take a new direction.

Tremonti is the third senior minister to resign from the cabinet since Berlusconi took office in 2001 and his abrupt departure comes at a particularly delicate moment for Italy.

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