ITALY: PM PRODI RESIGNS AFTER LOSING CONFIDENCE

C O N F I D E N T I A L SECTION 01 OF 02 ROME 000118 SIPDIS NOFORN SIPDIS E.O. 12958: DECL: 01/24/2017 TAGS: PGOV IT SUBJECT: ITALY: PM PRODI RESIGNS AFTER LOSING CONFIDENCE VOTE REF: A. ROME 0072 ¶B. ROME 0094 ¶C. ROME DAILY REPORT (25 JANUARY 2008) ROME 00000118 001.2 OF 002 Classified By: Ambassador Ronald P. Spogli for reasons 1.4 (b) and (d). SUMMARY -------------- ¶1. (SBU) Romano Prodi submitted his resignation to President of the Republic Giorgio Napolitano January 24 after losing a confidence vote in the Senate 156 to 161 earlier that evening. Napolitano accepted Prodi's resignation "with reserve" and asked Prodi to remain as caretaker PM until Napolitano formally swears in a new PM, which could take place in a matter of days, weeks or longer. Napolitano has scheduled consultations with political leaders/former Presidents through the evening of Tuesday, January 29, after which he will decide whether to ask someone to try to form a new government, call new elections, or schedule additional consultations. The political situation is too fluid to predict what will follow. END SUMMARY PRODI RESIGNS AFTER LOSING SENATE CONFIDENCE VOTE -------------- -------------- ¶2. (U) Romano Prodi submitted his resignation to President of the Republic Giorgio Napolitano January 24 after losing a confidence vote in the Senate 156 to 161. Prodi's resignation capped off a day that began with speculation that he would resign in advance of the Senate vote in order to avoid the political loss of face involved in failing at a confidence vote. ¶3. (SBU) Prodi easily won a January 23 confidence vote in the lower Chamber of Deputies where his coalition enjoyed a large majority even after former Minister of Justice Clemente Mastella withdrew his party's support January 21, when Naples prosecutors linked him to a corruption scandal involving his wife (REF A). However, Prodi's Senate majority had been tenuous since he took office twenty months ago. NAPOLITANO BEGINS CONSULTATIONS/PRODI AS CARETAKER -------------- -------------- ¶4. (SBU) Napolitano accepted Prodi's resignation "with reserve" and asked Prodi to remain as caretaker PM until Napolitano formally swears in a new PM. As caretaker PM, Prodi will conduct day-to-day business of the government and is expected to avoid politically significant actions. It is also tradition that a caretaker government restricts its ministerial meetings with other countries to multilateral events. The MFA has already canceled a number of international meetings including a summit with Egyptian President Mubarak. Napolitano began a "profound but rapid" period of consultations with party leaders January 25 that is scheduled to continue through the evening of Tuesday, January ¶29. The process of getting to a resolution could take days, several weeks or longer. SCENARIOS UNDER DISCUSSION -------------- ¶5. (SBU) Napolitano is said to favor naming a technical/institutional government capable of at least passing electoral reform, but he must be confident the potential PM could win a vote of confidence in the now bitterly partisan Senate (and the Chamber of Deputies) before giving him a mandate. Political observers are currently discussing three scenarios: Technical/Institutional/Transitional Government Through 2009: DPMs D'Alema and Rutelli, Union of Democrats of the Center (UDC) leader Casini, and Chamber President Bertinotti reportedly favor a technical/institutional, or even a transitional government with a political flavor that would last through at least the spring of 2009 when European elections are scheduled. This government would include both the left and the right and would be mandated to tackle electoral and other institutional reforms that neither Prodi nor former PM Berlusconi's government were able to address adequately. Senate President Marini is currently in pole position to lead such a government, but Senator Dini, Berlusconi confidant Gianni Letta, former MoI Pisanu and others have also been mentioned. Immediate Elections: Center-right leaders Berlusconi, Fini and Bossi, as well as Prodi and the small radical left ROME 00000118 002.2 OF 002 parties are pushing for immediate elections, though each for different reasons. PD Secretary Veltroni is also believed to favor immediate elections. The soonest elections could be held is April or May of this year. Transition Government to June 2008 Elections: A recently floated compromise would involve the naming of a short-term transitional government charged solely with electoral reform, and scheduling new elections no later than June, 2008. This would satisfy Napolitano's preference not to dissolve parliament/call new elections in the absence of electoral reform, Berlusconi's desire to cash in on his current popularity as well as remove Prodi from his caretaker PM role sooner rather than later. (Note: Berlusconi claims that elections today would give the center right a 12-15 percentage point margin of victory. End note.) Marini, Gianni Letta, Dini and Pisanu are frequently mentioned as PM candidates in this scenario, as well. COMMENT -------------- ¶6. (C/NF) Prodi went down fighting and has few political friends left. The fragile and unpopular government he led for twenty months was hamstrung by internal contradictions, constantly on the verge of crisis and unable to stem the growing sense of pessimism and dislike of the political class among the Italian people. The way forward is unclear. The immediate next steps are constitutionally in the hands of President Napolitano, though his ultimate decision will be conditioned by the political fallout from the past several days. It is unlikely that there will be much clarity until after Napolitano has finished his first round of consultations on January 29. END COMMENT. SPOGLI