Berlusconi, ever the survivor, denies he will resign

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Silvio Berlusconi is Europe's most skilled political survivor. He has won three elections and has won more than 50 confidence votes in the past three years alone. Even the barrage of sex and alleged corruption scandals couldn't fell Italy's billionaire media magnate and chief showman.

Most political journalists in Europe have written Mr. Berlusconi's political obituary a dozen times since he won the 2008 election, and each time they were wrong. But on Tuesday they might be right this time, for Mr. Berlusconi seems to be a man cornered.

On Monday, as Italian bond yields surged to a record high of 6.6 per cent, a crisis level that no euro-zone government has been able to sustain for long without suing for a bailout, rumours swirled that Mr. Berlusconi, 75, was on the verge of resigning.

The source was none other than one of his closest advisers, Giuliano Ferrara, the editor of the daily newspaper Il Foglio. He wrote that Il Cavaliere (The Knight), as he is known, was negotiating his departure terms. On Sunday night, Interior Minister Roberto Maroni acknowledged on a TV show that his boss, the victim of a string of parliamentary defections, no longer had the numbers to hold his coalition government together.

No so fast, Mr. Berlusconi said. Using his Facebook page, he announced Monday afternoon that "The rumours of my resignation are groundless." He would appear in parliament for the Tuesday night vote to approve last year's public accounts – "I want to look at those who want to betray me in the face" – then call a no-confidence vote.

It wasn't immediately clear whether he intended to turn Tuesday's accounts vote itself into a no-confidence vote or hold it at another time. Clearly, the man was calling upon all his Machiavellian instincts to confound his enemies; it has worked countless times before.

If the vote goes against Mr. Berlusconi's fragile government and it implodes on Tuesday, he will be forced to resign. A caretaker government would probably be formed – one committed to pushing through the austerity and economic reform programs promised at the Oct. 26 European Union and now monitored by the International Monetary Fund – followed by an election that Mr. Berlusconi may or may not contest.

Mr. Berlusconi's political demise would come as little surprise, not just because his credibility has been crumbling faster than the value of Italy's sovereign bonds, but because the euro-zone debt crisis has been as rough on politicians as it has on their countries' economies.

Since the start of the debt crisis two years ago, when the new Greek government learned that official debt data had been an elaborate fiction for years, one government after another has been toppled as anger about job-killing austerity programs and economic and regulatory incompetence turned to rage.

In Britain last year, the Labour government of Gordon Brown was tossed out in favour of David Cameron's Conservative-Liberal Democrat coalition. In February, Ireland's Fianna Fail party suffered a crushing defeat and, later Spanish Prime Minister Jose Luis Rodriguez Zapatero announced he would not contest the general election, to be held on Nov. 20. On Monday, Greek Prime Minister George Papandreou stepped down to make way for a unity government committed to meeting the conditions for a new, €130-billion bailout, without which the country would go bankrupt.

The popularity ratings of Nicolas Sarkozy of France, which on Monday unveiled a new €18.6-billion austerity program designed to protect its threatened top-notch credit rating, have plummeted. Ditto Germany's Angela Merkel. Both could land in the political wilderness in the next elections.

Mr. Berlusconi seemed to have a fairly strong hold on his premiership until July, in spite of the accusations of sex with an underage prostitute, the Moroccan belly dancer "Ruby," therapy in the form of "bunga bunga" when he should have been minding the financial shop and several court cases alleging corruption.

It appears the turning point came in mid-summer, when he turned on Finance Minister Giulio Tremonti, who was well regarded inside and outside Italy and could take credit for preventing the Prime Minister from embarking on a spending spree when Italy needed to conserve cash (in fact, Italy has one of the lowest deficits in the euro zone; it is its enormous overall government debt load, at €1.9-trillion, that is scaring the market as Italy's financing costs rise). "He thinks he's a genius and everyone else is stupid," Mr. Berlusconi said of Mr. Tremonti in an interview with Italy's La Repubblica newspaper.

Since then, Mr. Berlusconi has been something close to a pariah among international leaders, who feared that he was not doing enough to prevent the Greek debt crisis from swamping Italy. The euro zone lacks the financial firepower to save Italy, the euro zone's third-largest economy. There are rumours that the European Central Bank has not been unhappy to see Italian bond yields rise. As they go up, it has put pressure on Mr. Berlusconi to take the austerity and economic reform programs more seriously.

Confidence in Mr. Berlusconi, however, may be too far gone to allow him to remain in control of an economy in rapid decline. He did himself no favours when, after the G20 summit in Cannes, he declared Italy's economy essentially sound because "restaurants are full, it is difficult to reserve a seat on a plane, holiday resorts during bank holidays are fully booked."

Those bookings could rise by one as early as Tuesday.