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Italy's Berlusconi faces challenges to authority
Italian Prime Minister Silvio Berlusconi was confronted with challenges to his authority on Friday after a coalition partner spurned his leadership and the central bank governor appeared to ignore a call to quit. Berlusconi, facing national elections next year that opinion polls show he would lose, was forced to name a new economy minister on Thursday after Domenico Siniscalco quit in rows over the 2006 budget and Bank of Italy Governor Antonio Fazio. For the first time Berlusconi put his leadership into question, offering to debate with restless coalition allies whether he should lead the centre-right bloc into elections. The centrist Union of Christian Democrats (UDC), one of four coalition partners and for months a thorn in Berlusconi's side, quickly took up the challenge and snubbed Berlusconi. "There are those who think that the best candidate in 2006 would be Silvio Berlusconi," said UDC leader Marco Follini. "There are those who, like myself and the UDC, think it isn't like that." Berlusconi said on a late-night TV talk show he was an asset to the coalition but added: "If there is a better candidate then I am willing to stand down." Scenting blood, the opposition said the government should quit and call early elections. The polls are due by May 2006. "A government which can't agree on the most important and defining part of its business, the budget, so that the economy minister is forced to resign must do just one thing: quit," said opposition leader Romano Prodi. FAZIO STAND-OFF Responding at last to calls from some of his own ministers, Berlusconi told Fazio he should step down over accusations he unfairly favoured a local bank in a cross-border takeover fight. Fazio, denying any wrong-doing and staunchly resisting the calls for him to quit, went ahead with a trip to Washington for Group of Seven and International Monetary Fund meetings. On arrival he declined to comment on Berlusconi's call for him to step down, simply saying "Good night" to reporters. Berlusconi said there was "no battle of wills" between him and Fazio and that only the European Central Bank could oblige Fazio to quit if it believed he had broken the law. The government had no power in the matter, he said. "We ask Fazio ... if it might perhaps be opportune for him to resign in view of international markets and ratings agencies," said Berlusconi. The IMF's top official for Europe, Michael Deppler, said Italy's political woes were not likely to have short-run economic implications. "If anything, Italy seems to be doing a bit better over the past few months," Deppler told Reuters, citing stronger second-quarter economic data. Berlusconi named Giulio Tremonti, Siniscalco's predecessor as economy minister and a harsh Fazio critic, to return to his old job in a move sure to pile more pressure on the 68-year-old central bank governor. Tremonti and Fazio are due to represent Italy at the Group of Seven and IMF meetings starting in Washington on Friday. In a measure of the political turmoil, two of the four parties in Berlusconi's coalition supported Fazio even after the prime minister had called on him to quit. When he returned from Washington, Fazio would face questioning by magistrates investigating Banca Popolare Italiana's attempted takeover of Banca Antonveneta, judicial sources have said. Former Italian President Francesco Cossiga said of the turmoil: "This is a total disaster. It couldn't get worse than this."
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