Italian Prime Minister Enrico Letta wins a crucial vote of confidence after a dramatic climbdown by Silvio Berlusconi. But investors are becoming increasing concerned about possible damage to the rest of the euro zone. David Pollard reports.
To the brink and back again. As Italy plays out its latest drama, Prime minister Enrico Letta fights to mend a split he says is tearing the country apart. (SOUNDBITE) (Italian) Italian prime minister, Enrico Letta, saying: "Italy is running a risk that could be fatal, without remedy. Avoiding this risk, to seize or not seize the moment, depends on the choices we will make in this chamber." A remedy does appear - for today at least - in the unlikely guise of Silvio Berlusconi. The man whose power brought five ministers out of the ruling coalition - triggering the current crisis and threatening to bring down the government - stage manages a turnaround worthy of a media mogul. Some of those ministers, including his deputy, Angelino Alfano, had threatened to defy Berlusconi and swing their support behind Letta after all. Berlusconi says his decision was made in the common good. (SOUNDBITE) (Italian) People of Freedom Party (PDL) leader, Silvio Berlusconi, saying: "Due to the fact that Italy needs a government that can produce the structural and institutional reforms the country needs to modernise itself we have decided, not without some internal strife, to support the government." Debate still rumbles on about the pace of those reforms. Youth unemployment at 40%, slippage in deficit targets and massive public debt are top of a list of ailments worrying investors. Prime minister Letta says if necessary - and with or without a convincing majority - his programme is still achievable. BGC Partners' Mike Ingram says a long and dangerous road lies ahead. (SOUNDBITE) (English) Mike Ingram, Markets Analyst, BGC Partners, saying: "If economic reform isn't pursued, if it's thought to be economically unstable, it has the potential to bring down the entire Eurozone and we'll have a repeat performance of the economic and market instability that we saw last Summer.." Berlusconi has yet to face a Senate decision on whether to expel him from parliament because of his fraud conviction. He says he'll fight on. But politics professor Leonardo Morlino says eventual elections may change his fortunes. (SOUNDBITE) (English) Leonardo Morlino, Professor of Political Science at Luiss University in Rome, saying: "I expect a strong decline for Berlusconi and maybe the beginning of the end of him as a political leader." As the Senate counted the votes of confidence, a solid majority emerged in favour of Letta and his reform programme. Plaudits for the prime minister .... - but jeers from the crowd for Berlusconi after his apparent climbdown, as he leaves parliament to ponder his fate.