He spent days doing his best to hold on to power. But in the end, it proved impossible. On Tuesday evening in Rome, Italian Prime Minister Silvio Berlusconi finally indicated he was ready to resign, according to an announcement from the office of President Giorgio Napolitano, where Berlusconi had been for a meeting.
Berlusconi has made his resignation conditional, saying he plans to stay on until the Italian parliament pushes through a package of measures demanded by European Union leaders aimed at reducing Italy's vast debt and restoring investor confidence in the country. The move comes just hours after a humiliating budget vote in parliament during which it became clear that the prime minister no longer had a majority.
The austerity package is likely to be voted on in both houses of the Italian parliament this month. Napolitano plans to hold consultations with parties from both Berlusconi's governing coalition and the opposition in an effort to build a new government. The statement from the president's office said that Berlusconi had "demonstrated to the head of state his understanding of the implications of today's vote in the chamber of deputies," as the lower house of Italian parliament is known.
The budget bill voted on earlier in the day only passed because the entire opposition abstained. Berlusconi received 308 votes, short of the 316 required for an absolute majority. Prior to the session, stock markets had rallied in the hopes that Berlusconi might lose and resign immediately, but began falling again after Berlusconi's coalition won the vote.
Immediately following Tuesday's vote, Pier Luigi Bersani, head of the largest opposition group, the Democratic Party, urged the prime minister to step down. "I ask you, Mr. Prime Minister, with all my strength, to finally take account of the situation ... and resign," he said, according to Reuters. He also voiced concern that otherwise, Italy may no longer be able to raise money on the financial markets. This week, interest rates on Italian sovereign bonds climbed to well over 6 percent, peaking at 6.74 percent on Tuesday, the highest they have been since the introduction of the euro.
Most analysts consider 7 percent to be the level at which borrowing becomes unsustainable. Greece, Ireland and Portugal have all been forced to seek emergency EU funding when their borrowing costs hit the 7 percent mark. Italian debt stands at 120 percent of the country's annual economic output.
At a meeting of EU finance ministers in Brussels, European Commissioner for Economic and Monetary Affairs Olli Rehn characterized Italy's current situation as "very worrisome," prior to the announcement of Berlusconi's readiness to step down.
The Tuesday night announcement follows a week in which Berlusconi's majority in parliament steadily shrank as coalition deputies turned their back on the prime minister. Berlusconi, 75, fought hard to remain in power, saying that he wanted to look at the "traitors" in parliament "in the face." He also met with leading political allies together with his own family in Milan on Monday, prompting rumors that his resignation was imminent.
His position became untenable on Tuesday when his closest parliamentary ally, Northern League head Umberto Bossi, urged the prime minister to step aside.
Italy represents the third largest economy in the euro zone and there are concerns that the country is far too big to bail out on the model of Ireland or Portugal. In late October, euro-zone leaders gathering for a summit in Brussels passed a series of measures aimed at restoring confidence in the common currency area's ability to find a solution to the ongoing European debt crisis.
In addition to pushing through a drastic, 50-percent reduction in Greek debt, leaders also laid the groundwork for boosting the impact of the euro bailout fund, the European Financial Stability Facility. The euro zone hoped to be able to attract outside investors to the fund, increasing its size to €1 trillion. But ongoing political chaos in both Greece and Italy both dampened investor enthusiasm and led to doubts that the fund would have the desired effect.
Finnish Prime Minister Jyrki Katainen told his country's parliament on Tuesday that, "it is difficult to see that we in Europe would have resources to take a country of the size of Italy into the bailout program," according to Reuters.
Berlusconi has been a dominant fixture in Italian politics for 17 years and provided a degree of stability that the country had not enjoyed in the several decades between the end of World War II and Berlusconi's first election to the premiership in 1994. Recent years have been overshadowed by numerous scandals, including accusations that he had paid for sex with an underage prostitute. Many have accused the media mogul of seeking to change laws to avoid prosecution.
Financial markets began to quickly lose confidence in Berlusconi in late summer, after he proved unwilling or unable to implement a €54 billion austerity package his government passed. The belt-tightening measures were pushed through after an initial round of investor flight in August, which prompted significant purchasing of Italian bonds by the European Central Bank. The ECB has recently begun buying large quantities of bonds once again.