Berlusconi fights for survival in confidence vote

ROME (Reuters) - Italian Prime Minister Silvio Berlusconi faces a close parliamentary confidence vote on Tuesday that could drive him from power or leave him clinging to a wafer-thin majority.

The 74-year-old media tycoon has repeatedly defied the sceptics, shrugging off a string of gaffes and scandals to win three elections and transform Italy's political landscape since gaining power for the first time in 1994.

But after a year overshadowed by corruption and sex scandals and an acrimonious split with former ally Gianfranco Fini that cost him a secure parliamentary majority, a day of reckoning has arrived for Berlusconi.

His struggling government faces a no confidence motion in the lower house brought by the opposition and rebel centre-right deputies loyal to Fini and a confidence vote it has put forward itself in the Senate where it has a majority.

If he loses either, he will have to step down, leaving President Giorgio Napolitano to appoint a new government or call elections more than two years before the scheduled date in 2013.

An intensive campaign of lobbying and persuasion appears to have won over enough deputies to give Berlusconi a chance of survival, with many commentators estimating the government may just have the numbers to scrape through.

"Battle to the last vote," headlined Turin daily La Stampa.

With 630 deputies in the lower house, Berlusconi in theory needs 316 votes to be sure of victory but the actual total required may be smaller due to abstentions or the absence of a heavily pregnant member of the opposition Democratic Party.

The Senate result is expected around 11.30 a.m. (1030 GMT), with the lower house result likely after 1.30 p.m. (1230 GMT), with police blocking off the centre of Rome to head off expected protests by thousands of students and others.

"GO TO ELECTIONS"

But the government's prospects further along remain extremely uncertain and a tiny majority would leave it unable to embark on major reforms, pointing to further crises ahead.

"Either there are the conditions for continuing in government with a solid majority or it would be better to go to an election," Interior Minister Roberto Maroni, a senior member of Berlusconi's Northern League coalition allies told reporters.

Speaking in parliament on Monday, Berlusconi offered a pact to doves on the rebel side, pledging to open his government to a broad coalition of moderates if he survives but offering no clear sign of what concessions he might offer.

"The impression is that, despite everything, Berlusconi is in a position to win the confidence vote, albeit with a tiny majority. After which the question remains of what he wants to do with the vote," Stefano Folli, one of Italy's most respected political commentators, wrote in financial daily Il Sole 24 Ore.

Tuesday's vote is being closely watched by financial markets on high alert over the euro zone debt crisis, and a prolonged period of uncertainty or a divisive election campaign could turn the spotlight on Italy's strained public finances.

Italy has one of the heaviest public debt burdens in the world, at almost 120 percent of gross domestic product but it has largely escaped the euro zone debt storm thanks to tight control of spending and a conservative banking system that avoided excess during the market boom.

Markets were reassured last week when the 2011 budget was passed in parliament but politicians on all sides are acutely aware of the danger of contagion and Berlusconi warned on Monday that it would be irresponsible to risk a crisis now.

A sharp jump in the premium investors demand to hold Italian debt rather than benchmark German bonds last month underlined the risk, although the interest rate spread has since come back from the record levels it hit on November 30.

(Editing by Ralph Boulton)