By Crispian Balmer
ROME (Reuters) - Former prime minister Silvio Berlusconi's ability to influence Italian politics has taken a beating with his party sidelined in a vote to elect new judges and also forced to lay off all its staff as funds dry up.
The twin blows highlight the centre-right's struggle to remain a dominant force, even as Prime Minister Matteo Renzi's centre-left government battles to contain a scandal over its contested rescue plan for four small Italian banks.
The decline of Berlusconi's party also underscores the growing strength of the anti-establishment 5-Star Movement (M5S), which has become the main opposition group in the euro zone's third biggest economy.
After efforts to elect three new Constitutional Court judges failed in 31 successive parliamentary votes stretching back over the past two years, Renzi cut a deal with the M5S on Wednesday to secure the necessary majority to fill the trio of vacancies.
The country's top court rules on whether new laws passed by parliament comply with the constitution, and as such plays a vital role in regulating the political landscape.
The jurist supported by Berlusconi's Forza Italia (Go Italy!) party was snubbed, leaving the former premier fuming.
"It is very bad that the Constitutional Court does not have a single judge who belongs to the centre-right. Very, very bad," said Berlusconi, who resigned as prime minister in 2011 at the height of the euro zone debt crisis and has since been hit by a tax fraud conviction and sex scandals.
NO CONFIDENCE
Renzi said he had hooked up with M5S because he had grown tired of trying to find a deal with Forza Italia. He accused the party, which is led in parliament by former minister Renato Brunetta, of growing increasingly extremist and fractured.
"We need to understand if there are still any moderates on the centre-right. When I see Brunetta yelling from morning to night, I just don't know," Renzi told Canale 5 TV.
Brunetta took to Twitter to denounce Renzi as "shameless".
Renzi's decision to ignore the traditional opposition ranks and seek an arrangement with M5S came just days after Forza Italia announced it would present a motion of no confidence in the government over the bank rescue package, which left shareholders and some retail investors out of pocket.
The parliamentary motion is due to be debated next week - a move that will keep the spotlight on Renzi over the affair, but stands little chance of success.
Support for Forza Italia has eroded since the theatrical Berlusconi lost power and recent polls have suggested it has the backing of some 10 percent of the electorate against 28 percent for M5S and 32 percent for Renzi's Democratic Party (PD).
The media-magnate-turned-politician is seeking to forge an alliance with its one-time ally, the Northern League. But Forza Italia is clearly struggling and announced on Tuesday that its dire finances meant it had to lay off all its employees, estimated at just over 80.
It said the move was a result of a 2014 law, backed by his own parliamentarians, which capped donations by personal individuals to political parties at just 100,000 euros (72,959 pounds) and eliminated state financing.
"We need to remove the cap on private contributions to party finances," said Berlusconi, one of Italy's richest men. "As usual, I wanted to help Forza Italia, but I couldn't, because I would have been committing a crime."
(Editing by Mark Heinrich)
