Berlusconi faces crisis as lira falls

STORM clouds gathered over the government of Silvio Berlusconi yesterday, as a crisis of confidence on the financial markets sent the lira crashing out of control and members of the coalition hurled bitter accusations at one another.

Mr Berlusconi's problems were compounded by comments from the Labour Minister, Clemente Mastella, a member of the Christian Democratic Centre (CCD). He blamed the lira's problems on the machinations of supposed Jewish lobbies in New York; he accused them of conspiring against the government. Mr Mastella later issued a half-hearted retraction but the damage to the government's credibility had been done.

By the afternoon the currency had plunged to a record low of less than below 1,030 lira to the German mark, as investors became unsettled by the unstable political situation brought about by Mr Berlusconi's ham-fisted leadership. Financial speculators were blamed for the lira's collapse. That did not disguise the fact that Mr Berlusconi's political misjudgements have shaken the markets' confidence.

After just 100 days in office, Mr Berlusconi's coalition is riven with disputes. There are constant public feuds between the Prime Minister's Forza Italia, the Northern League and Gianfranco Fini's neo- Fascist National Alliance.

The billionaire Prime Minister responded to the crisis by going on television, with the aim of addressing the nation and inspiring confidence in his leadership. In televised interviews Mr Berlusconi called for calm.

''Be calm - the reality is that it is not raining. Italy has never had it so good,' he said on a main news programme. About 200,000 new jobs had been created, production was growing and inflation was at an all-time low, he said. 'Here is an economy which works, that is the reality,' he added.

Mr Berlusconi's televised appearances have worked well in the past. But over-reliance on media exposure is starting to show diminishing returns. His approval rating has plunged in the opinion polls to about 53 per cent. His main problem is his ownership of Fininvest - Europe's second largest media conglomerate. In two interviews published yesterday he admitted Fininvest had bribed tax officials. The admission could reopen the controversy over his private interests. More embarrassment followed when the Health Minister, Raffaele Costa, appealed to Mr Berlusconi to reassure people about the economy. Another minister blamed the lira's problems on the opposition. 'The opposition . . . are even allying themselves with those who want to hit out at national interests,' said Publio Fiori, a member of the National Alliance.

The 'systematic denigration' of the government had encouraged speculation against the lira, he said, echoing the anti-Semitic remarks of Mr Mastella. 'The presence of the National Alliance in the government worries New York's Jewish lobby,' Mr Mastella was quoted as saying in several newspapers yesterday. 'We should explain to Jewish high finance that Gianfranco Fini is increasingly distant from a nostalgic right.'

Interest rate fears, page 12

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Tradewind Recruitment: Science Teacher

£90 - £140 per day: Tradewind Recruitment: I am currently working in partnersh...

Recruitment Genius: Doctors - Dubai - High "Tax Free" Earnings

£96000 - £200000 per annum: Recruitment Genius: Looking for a better earning p...

Recruitment Genius: PHP Developer

£32000 - £36000 per annum: Recruitment Genius: A rapidly expanding company in ...

Recruitment Genius: PA

Negotiable: Recruitment Genius: A PA is required to join a leading provider of...

Day In a Page

Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness