Italian premier quitting after losing key support

Abandoned by an ambitious party rival, Italian Premier Enrico Letta announced Thursday he is resigning after losing essential support for his battered, 10-month-old coalition government.

Hours earlier, Matteo Renzi, the 39-year-old leader of Letta's Democratic Party, rallied party executives to an overwhelming vote for a change of command in the premier's office. The Florence mayor is a fast-rising star in Italy's political firmament and has been maneuvering for months to become an unusually young premier.

Renzi said it was time for "radical change" in order to pull economically stagnant and politically unstable Italy out of its "quagmire," insisting that Italy needs more decisive leadership than Letta has offered.

Milan's market barely reacted to the development, and was down by barely 0.17 percent.

Even in a country known for its political tumult, the last several years have been bumpy. Renzi would be the fourth premier since late 2011, as the country scrambled to regain the confidence of skeptical markets with tough austerity measures.

Making no comment on his bitter defeat, Letta said he would formally hand in his resignation on Friday. He has defended his short tenure, insisting in a last-ditch pitch to fellow Democrats on Wednesday that Italy's economy has just started growing again, even if slowly.

President Giorgio Napolitano, who has staunchly opposed calling for new elections, could conceivably ask Letta to try to win a vote of renewed confidence in Parliament to make the legislature, and not the Democratic Party, the arbiter of the premier's fate. But without most of his Democrats, the largest party in Parliament, Letta's chances of commanding a legislative majority appeared doomed.

Napolitano would likely ask Renzi to try to form a coalition solid enough to command a working majority in Parliament that could quickly enact pressing electoral reform and measures to create jobs, especially with youth unemployment hovering around 40 percent.

Those consultations will bring Silvio Berlusconi, the scandal-tainted former premier, back onto center-stage. Berlusconi's center-right Forza Italia party is Italy's second-largest party after the Democrats, and his lawmakers' backing will be crucial to Parliament's effectiveness.

Forza Italia said Berlusconi will lead his party's delegation to the presidential palace to confer with Napolitano.

Only last month, he made a deal with Renzi to back electoral reform. Both Renzi and Berlusconi are betting that overhauling the voting system so that the ballot box will yield clear winners, instead of the frequently fragmented coalitions it has so far.

Whether Renzi's power grab might alienate potential voters is a big unknown. Renzi told his party's executives he realizes there is a "risk he could be burned."

One of the Democratic leaders who opposed Renzi's gambit, Pippo Civati, said after the showdown: "I might be in the minority" but the party should "give the word back to the citizens" at the ballot box to determine who governs them.

Civati also worried that Berlusconi could do an about-face on the reform deal, robbing Renzi of his main potential achievement. "Let's hope Berlusconi doesn't want to change is mind," Civati said.

In response to critics who see him shamelessly going after power, Renzi insisted pulling the plug on the government wasn't about "the oversized ambition of Renzi." Just a week ago, Renzi has said he wasn't interested in taking Letta's place through a power play.

Italian voters could be irked that they aren't picking their government's leader at the ballot box. Letta didn't run for office, but was asked by Napolitano to try to end weeks of political stalemate that resulted from inconclusive elections exactly one year ago.

The last candidate for premier to be elected was Berlusconi in 2008. But the 2011 financial market crisis forced him to resign, and Napolitano then tapped economist Mario Monti to lead a non-elected government of technocrats. A year later, Monti's government collapsed after Berlusconi quit supporting him.

Renzi also might be handicapped by his experience in Parliament — zero. Before serving as Florence mayor, he was president of Florence province, a relatively minor post.

London-based analyst Wolfango Piccoli said "markets are likely to react positively to Renzi" becoming premier, because they figure "the pro-reform and straight-talking politician will re-ignite reforms."

A Berlusconi protege, Interior Minister Angelino Alfano, who stuck with Letta's government even after Berlusconi defected, took a wait-and-see attitude toward a potential Renzi government.

"Either you do the big things or if you are going to do the little things, it's better to have elections," Alfano told reporters. "We're not in love with Parliament lasting until 2018," when elections are formally due, Alfano said.

He called it "Kafkaesque" that on Friday, the national statistics bureau was set to unveil figures backing up Letta's contention that during his embattled tenure Italy's economy had returned to growth after years of dismal performance. Still, Alfano likened the battered Letta government to "a ship caught between the waves of a tempest."

Colleen Barry in Milan contributed to this report.

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