Jubilant crowds celebrate "free Milan" as Berlusconi suffers heavy local poll defeats

MILAN, ITALY (MAY 30, 2011) REUTERS - Jubilant crowds gathered in the streets and the central square of Milan on Monday (May 30) to celebrate the victory of centre-left candidate Giuliano Pisapia in local mayoral elections.

"Free Milan", the supporters chanted.

The victory of Pisapia marks a shattering loss for Italian Prime Minister Silvio Berlusconi in the local elections that threaten to unbalance his fractious centre-right coalition government.

Already enmeshed in three corruption trials and a scandal over underage prostitution, the 74-year-old premier lost control of Italy's financial capital, the base of his vast business and media empire, as well as a string of other towns and cities.

With most votes counted, leftist Giuliano Pisapia was set to take Milan's city hall with some 55 percent of the vote against around 46 percent for centre-right mayor Letizia Moratti.

Among a series of other losses, the southern port of Naples, Italy's third largest city, went to the opposition Italy of Values party by a landslide and the results raised the prospect of national elections before the scheduled 2013 date.

"Seeing that my father was from Naples and my mother Milanese," Pisapia quipped at a celebration at his party's headquarters.

The centre-left easily held on to power in Turin and Bologna in the first round of voting and the latest blow threatened to expose divisions in the ruling alliance between Berlusconi's PDL party and the pro-devolution, anti-immigrant Northern League.

The League, whose support is vital to Berlusconi's thin majority in parliament, also suffered heavily, losing control of once-impregnable cities such as Novara or Pavia to deepen alarm in the party over their links to the struggling prime minister.

Interior Minister Roberto Maroni, one of the most senior Northern League ministers, said the result did not threaten the survival of the coalition but it was still a "slap in the face" and a sign that the government needed to do better.

As the government prepares to bring forward plans to slash the budget deficit by 40 billion euros ($57 billion) after ratings agency Standard and Poor's cut its outlook for Italy's A+ rating to "negative" from "stable", the stakes are high.

Italy has one of the most sluggish economies in Europe, more than a quarter of its young people are unemployed and government policy is constrained by the need to contain a debt mountain equivalent to some 120 percent of gross domestic product.

Berlusconi's decision to travel to Romania on Monday was widely interpreted as a sign he expected defeat but senior ministers have ruled out any change of course before national elections due in 2013.

After a bitter campaign marked by accusations of smear tactics and dirty tricks, economic stagnation trumped other issues and voters punished the ruling party as they had in other European countries including Germany and Spain.

After being punished for initially calling the vote a referendum on his popularity and policies, Berlusconi blanketed the airwaves with trademark tirades against his long-time enemies: the left and "communist" magistrates.

Ahead of the second round of voting Berlusconi launched increasingly vituperative attacks on Pisapia, saying he would turn Milan into Italy's Stalingrad, an Islamic city or a gypsy metropolis.

Pisapia's message to supporters in Milan's central square on Monday evening was contrary.

"I have a problem, which is not a serious problem for Milan but the first thing we need to do is to change slogan -- we have achieved "Milan, free Milan". We have liberated Milan," he said.

"We need to re-establish this city as a hospitable, joyous city, a city where the streets are filled with happiness, smiles and irony. Because we have won with a smile and with irony and this is the lesson," Pisapia added.

Political analyst James Walston of the American University in Rome said the results showed that Italy was experiencing its own version of the Arab spring.

"It means that Italy is going through what looks like a slow revolution. It's not Egypt, this is not Tahrir Square but it does as if things are changing and the tide has certainly changed. Whether it comes in and submerges Berlusconi's period is still something which we'll have to wait for," he said.

Walston said that while national elections in the autumn were a real rarity in Italy, elections next spring, a year early, could not be ruled out.

However, he said Berlusconi's time may not be up yet.

"Berlusconi's behaviour over the last few weeks has been one of desperation and his buttonholing Obama and the others at the G8 to tell them how terrible and nasty the judges are in Italy was just further proof of this desperation. There have been other occasions when he seems to have lost it but he's very good even when he looses it, he's very good at getting it back. However bad things look like for him now, he's not out yet and he still has an awful lot of resources, personal resources, energy and skills. And money, money and control of the media. So, it would be wrong to write him off immediately," said Walston.

Berlusconi's last minute television blitz, to which opposition parties were not given the chance to reply, prompted complaints that he was abusing his domination of the media, and magistrates in Rome opened a formal investigation on Monday, the latest addition to the troubles faced by the premier.