Berlusconi Softens Italian Austerity Plan

Italian Prime Minister Silvio Berlusconi backed away from the brink Thursday, tempering economic austerity with billion-dollar concessions and persuading labor unions to scrap a nationwide general strike scheduled for today.

The agreement reached in a marathon 21-hour negotiating session with the three main unions gives breathing space to the beleaguered Berlusconi, whose right-wing coalition government now looks safe in the short term after a precarious week.

The accord, reached in a marathon 21-hour negotiating session with the three main unions, followed a decision by Berlusconi’s Forza Italia movement and its coalition partners to stay together at least through the end of the year. Berlusconi has also lowered political temperatures with conciliatory gestures to Milan magistrates investigating him for alleged bribes to tax police by his $7-billion-a-year business and media empire, Fininvest.

“I wouldn’t dream of resigning,” he told a news conference Thursday, saying he will go to Milan to meet the judges but is setting no date. “I have sworn my innocence because I am convinced of it.”

Labor leaders, who had mounted a general strike and a million-strong rally in Rome against Berlusconi in recent weeks, expressed satisfaction with the compromise reached Thursday over the controversial 1995 government budget.

Seeking to reduce Italy’s sapping public deficit by $30 billion, the 58-year-old billionaire had proposed sharp cuts in Italy’s generous pension system.

Thursday’s agreement softened the blows, restoring full benefits to salaried workers who have completed 35 years of service, increasing social security for large and poor families and boosting aid to the lesser-developed Italian south.

With labor unions now on board, left-wing parties will likely mute their opposition to the budget, which has passed the lower house of Parliament, but appeared to be in trouble in the Senate.

Now, Berlusconi’s aides said, budget will go to the Senate for ratification Dec. 12, with good prospects of approval because of a constitutional Dec. 31 deadline.