Italy's Bersani meets Berlusconi to seek end to impasse

By Steve Scherer

ROME (Reuters) - Italian center-left leader Pier Luigi Bersani met his center-right rival Silvio Berlusconi on Tuesday to discuss the election for the next president of the Republic, offering hope of a breakthrough in the deadlock left by elections in February.

"It was a good meeting but we're at the beginning," Enrico Letta, deputy leader of Bersani's Democratic Party (PD), told reporters in parliament.

He said the meeting had focused only on the election of the next president, not on any possible deal to form a government.

Letta said there would be further meetings in the next few days with Berlusconi's People of Freedom (PDL) and other parties but said no names were discussed at Tuesday's meeting, intended to prepare the way for the start of the presidential election process on April 18.

The election of the next president, to succeed head of state Giorgio Napolitano whose term ends on May 15, is the next big test for the divided political parties, which have failed to reach an agreement on forming a government.

It is unclear how far any accord over the presidential election will clear the way to a deal that would allow a government to take office but the tone struck following the meeting was much more cordial than it has been in recent days.

"It was useful to get clarity on the criteria we need first to agree on a range of names, then on a person who can unite the country," Letta said.

"In a moment of great division we feel a strong need to give a signal of unity to the country. That's why we want to try to find unity around a name we can both support," he said.

In a separate statement, PDL secretary Angleino Alfano said the president would have to be a figure who could embody national unity and could not be hostile to any party.

"WE HAVEN'T FORGOTTEN"

The vote for the next president will be vital because with his mandate about to expire, Napolitano no longer has the power to dissolve parliament and call new elections and it will be up to his successor to find a way out of the deadlock.

Bersani, who won a majority in the lower house but fell short of the Senate majority which would have allowed him to govern, has so far refused Berlusconi's demands for a "grand coalition" between the two rival forces.

The other main force, the anti-establishment 5-Star Movement led by ex-comic Beppe Grillo, has refused any alliance with either of the big parties it blames for Italy's deep social and economic crisis.

In an interview with RAI state television, Bersani stuck to his rejection of Berlusconi's demands to form a coalition, saying the center-right leader had shown during the technocrat government of Mario Monti that he could not be trusted.

"When I meet him, I will say, 'We haven't forgotten. We know you even if you try to disguise yourself'," he said.

"We're trustworthy and we look for trustworthiness in others, if there are proposals, we'll see. Only they shouldn't come with proposals for a 'governissimo' because that's not possible. If they've got other ideas, we can talk about it."

Bersani has so far stuck to his hard line on Berlusconi despite increasing calls from senior figures in sections of his party for a dialogue with the center-right to avoid a potentially destabilizing return to the polls.

He wants to present a limited set of proposals to parliament and seek a wider accord among the parties for a broad series of institutional reforms, including changes to the widely criticized electoral law which led to the stalemate.

Berlusconi has demanded that the center-right be allowed to choose the next head of state as the price of its support to a government led by the center-left. He says the only alternative is new elections at the earliest date possible in June or July.

(Additional reporting by Roberto Landucci; Writing by James Mackenzie; Editing by Michael Roddy)

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Italy's Bersani tapped to form new government

ROME (AP) — Italy's center-left leader, Pier Luigi Bersani, was chosen Friday to form a new and viable government, which is badly needed to steer the country out of recession and get more Italians back to work.

The national elections last month produced no clear winner, but President Giorgio Napolitano said the 61-year-old Bersani was best positioned to create a government given "the most difficult circumstances" — a reference that the political leader has a comfortable majority in the lower house, but that the Senate is split.

The vote made plain voters' disenchantment with mainstream parties and largely divided over which forces should lead Italy at this delicate moment.

Bersani's forces finished first, but he has ruled out a coalition with former Premier Silvio Berlusconi's conservative alliance, which would risk further alienating the voting base of Bersani's Democratic Party.

But if he shuns Berlusconi, Bersani will need to win support from Parliament's new third bloc, a populist, anti-euro movement founded by comic-turned-political leader Beppe Grillo.

Grillo has rejected a vote of confidence to support any established party — and support in the required vote of confidence for a new government to go forward. Still, some Grillo lawmakers broke ranks over the weekend and voted to support Bersani's candidate as Senate speaker, a move that infuriated Grillo.

Bersani pledged dialogue with political forces in the coming days, seeking a balance between "a government seeking the change expected by the Italians and one able to carry out reforms."

Outgoing Premier Mario Monti's centrist forces finished fourth with around 10 percent of the vote. Monti, whose government took over in 2011 to enact reforms and austerity measures to safeguard Italy from the continent's debt crisis, continues as caretaker premier until a new one can be installed.

Investors are watching closely to see if Italy can form a stable government to continue on the course of reform. Italy's load of public debt has been growing, but borrowing rates have not come under pressure yet. Sentiment will be tested in a pair of bond sales next week.

Napolitano dismissed criticism that too much time has elapsed before tapping a potential leader. He noted that Israel and the Netherlands each took nearly two months to form governments. Italian elections were held Feb. 24-25, but Napolitano could not consult with leaders until after the new Parliament was seated last week and caucus leaders were chosen.

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Colleen Barry reported from Milan.

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Italy president asks Bersani to see if can form government

By James Mackenzie

ROME (Reuters) - Italian parties reacted skeptically on Friday to center-left leader Pier Luigi Bersani's call for a government backed by all political forces, complicating President Giorgio Napolitano's efforts to end the stalemate left by last month's election.

Napolitano has ended consultations with the parties to try to form a government after the election which gave the center-left control of the lower house but left it short of a majority in the Senate and thus unable to govern alone.

He is expected to announce later on Friday whether he has decided to give Bersani a mandate to try to muster support from other parties, or has opted for some other solution, such as asking a respected outside figure to try to build a broad coalition.

With no party holding a majority in parliament, Italy - the euro zone's third largest economy - faces the prospect of weeks of uncertainty just as the bank crisis in Cyprus has revived fears of a renewed bout of financial market turmoil.

Bersani said late on Thursday that he hoped to be able to present a limited program of economic and institutional reforms that could be backed by all forces in parliament, but he faces resistance from the other parties.

"The reality is that whoever gets a mandate to form a new government has to be able to show they have a stable political majority already in place. And at this moment, Bersani can't be that person," said Renato Brunetta, the lower house leader of Silvio Berlusconi's center-right People of Freedom party (PDL).

If Bersani cannot gather enough support, Italian media have speculated that Napolitano could ask Senate speaker and former top anti-mafia judge Pietro Grasso to try to form a government. He has said he would be willing to serve the state in any way he can.

However the anti-establishment 5-Star Movement led by former comic Beppe Grillo has repeatedly said it will not back a government led by any other party, leaving Bersani needing a deal with the center-right if he is to have a chance of success.

Former Prime Minister Berlusconi, who has been lifted by recent opinion polls showing his support is rising, says the inconclusive election result shows that Italy has not made a clear choice and that the center-left does not have the right to govern alone.

He has called for a cross-party coalition with Bersani's Democratic Party (PD) that would give his group a share in government and the right to decide the next president to succeed Napolitano, whose term ends in May.

RECESSION

If no durable accord can be reached, Italy faces a return to the polls within months, delaying any prospect of substantial reform to its stagnant economy, now stuck in its longest recession in 20 years.

Napolitano, the head of state, has given no hint of what he intends to do beyond telling the speakers of parliament that it was "absolutely necessary" to form a government, suggesting he will try to avoid early elections if at all possible.

"President Napolitano did not make his intentions known in our meeting yesterday," Luigi Zanda, head of the PD's Senate group, told state radio RAI on Friday.

Financial markets have been watching the political uncertainty closely although there has so far been no sign of the panic that gripped investors during the 2011 crisis which brought down the last Berlusconi government.

The main barometer of confidence, the spread between yields on Italian and German 10-year government bonds, has risen since the beginning of the year by some 20 basis points to 320 points, well short of the level of more than 550 seen in late 2011.

However Italy's 2-trillion-euro public debt is vulnerable to any bond market turbulence and public finances have deteriorated sharply during the recession, despite the tax hikes and spending cuts imposed by outgoing Prime Minister Mario Monti.

Monti's caretaker government cut its economic forecasts on Thursday and now sees gross domestic product contracting by 1.3 percent this year following the 2.4 percent decline in 2012. The budget deficit is expected to hit 2.9 percent of output, just within EU limits.

(Editing by Pravin Char)

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