Italy's Berlusconi closes key deal, steps back from candidacy

ROME (AFP) - Italy's Silvio Berlusconi revived his historic alliance with the far-right Northern League on Monday and stepped back from his leadership bid in a deal to shore up support ahead of February elections.

"An agreement has been signed," Mr Berlusconi said after weeks of uncertainty over whether his People of Freedom (PDL) party could heal a rift with the League to run together in battleground regions in the north of the country.

"I was sure we'd reach a deal because a party must be realistic, and not renewing our alliance would have been bad for us, the League and Italy," he said in an interview with Telelombardia television.

The League's head, Mr Roberto Maroni, said that under the deal Mr Berlusconi would head up the coalition but would withdraw his candidacy for the premiership.

"While there is no candidate yet for premiership, I can explicitly say it will not be Berlusconi," he said.

Italy's complex electoral system means that the PDL needs the League onside to scoop up key votes in the north, while the eurosceptic northern party has been hit hard by fraud scandals and was unlikely to survive without the PDL.

"It is a forced marriage. Both parties would have been in trouble without this coalition," said Dr Franco Pavoncello, politics professor at the John Cabot University in Rome.

The deal could see the left, led by cigar-chomping Communist Luigi Bersani, win a strong majority in the lower house of parliament but crucially give the PDL and League a majority in the Senate, should the vote in the north be split.

"My adversary is Berlusconi and the League," Mr Bersani said in an interview with La 7 television, brushing off the threat to the centre-left, saying: "We will take the majority in both the lower house and the Senate." Talks between the PDL and the League in recent weeks have been tense.

Many members of the anti-immigrant party have fiercly resisted forming a new alliance with Mr Berlusconi and the deal hinged on Maroni's demands that the billionaire media magnate withdraw his candidacy for premier.

"Given the electoral system, the pact was inevitable," said Mr James Walston from the American University in Rome.

But he added: "Strategically, the deal doesn't make sense because the parties hate each other. They have different agendas and different points of view." Mr Berlusconi said the post of prime minister "will be decided if we win" but could go to the PDL secretary Angelino Alfano - a sign the former prime minister may be giving up on his bid to lead Italy for the fourth time.

"Berlusconi is hedging his bets because he knows he's become a liability," Mr Walston said.

An opinion poll last week on the upcoming Feb 24-25 election put Mr Berlusconi and the PDL in second place with 19.5 per cent, behind the centre-left Democratic Party (PD) far in the lead with 35.3 per cent of voting intentions.

The new deal however has widened the gap between the PDL and its challengers.

"The deal with the League is an important move, nudging votes for the new coalition up to 25 per cent," Mr Pavoncello said.

But while the parties have been long-time allies, some observers warn that the latest alliance with Mr Berlusconi may see traditional League voters desert the party.

"The risk is high, because the League's electoral base does not want an agreement with Berlusconi and the alliance will not be easy for them to stomach," said Mr Stefano Folli, political commentator for Il Sole 24 Ore daily.

The PDL and League were allied until Berlusconi's downfall in 2011, when the three-time premier was ousted during a financial crisis which saw Mario Monti take over as head of a technocrat government.

The League refused from the start to back Mr Monti's government, while the PDL initially lent its support before pulling the plug last month and kicking off the electoral campaign.

Mr Berlusconi, who is currently on trial accused of paying for sex with a pole dancer when she was underage, said on Monday that he could be finance minister in the new government if the coalition wins.

"Berlusconi could hope to play a role. His bid to become finance minister does not surprise me, he has always had a vivid imagination," Mr Pavoncello said.