Colpevole: Supreme Court had bad news for Berlusconi (and the Italian government)

It took everyone a while to figure out what the Supreme Court final verdict in Silvio Berlusconi's tax fraud case meant in practice. Let's start from the easiest part: the four-year prison sentence has been definitively upheld. As we explained here, Berlusconi will only have to serve one year in reality - with house arrest or community service the most likely options, given his age.

The Supreme Court also said the five-year public office ban was excessive under Italian law and had to be cut down - so it referred it back to the Court of Appeal for review. In other words, it seemed Il Cavaliere had at least temporarily dodged the ban - arguably more important than the prison sentence from his point of view.

However, a new twist to the story emerged last night. Under Italy's new anti-corruption law, which was passed at the end of 2012 by Mario Monti's technocratic government, Berlusconi will not be allowed to stand for election for at least six years as a result of his tax fraud conviction. In practice, this means Berlusconi will not be able to run in the next Italian elections even if Letta's government saw through the entire five-year parliamentary term.

But there's more: Berlusconi also risks losing his seat soon(ish). According to the same law, the Italian Senate will have to vote on whether to expel Berlusconi with immediate effect. This vote will probably take place at some point in September - and will turn into a key test for the stability of Italy's coalition government.

So, in substance, the lose-lose scenario for Italian Prime Minister Enrico Letta's Democratic Party that we discussed here is materialising after all:

• If the Democratic Party votes to expel Berlusconi, it will put Italy's coalition government at risk;

• If the Democratic Party votes to keep Berlusconi in, it will put itself at risk of internal strains and criticism from angry voters. It would also provide a boost to Beppe Grillo's anti-establishment rhetoric.

At some point Mr Letta will have to decide whether it is acceptable for his party and his electorate to stay in government with a party whose leader has just been convicted for tax fraud. Italy's short-term political stability could also depend on the answer to this question.

Following the verdict, Berlusconi made a rather emotional statement. It was a political 'call to arms' for his supporters, with no mention of Letta or the future of Italy's coalition government. Berlusconi insisted he is the victim of "judicial doggedness without equal in the civilised world" and pledged to "fight on". We are pretty sure he will.

Verdict day for Berlusconi: Could a lose-lose scenario materialise for Letta?

Supreme Court judges in Rome have started deliberating, and the final verdict in Silvio Berlusconi's tax fraud case is expected by this evening. The former Italian Prime Minister is appealing against a four-year jail sentence and a five-year public office ban (see our reader-friendly Q&A for more details).

If the Supreme Court upholds the conviction, it would be the first time Berlusconi is issued with a definitive sentence, with no more appeals left. However, two further points of background are worth noting:

• As we explained in our Q&A, if Berlusconi were convicted by the Supreme Court, the Italian Senate would have to vote on whether to lift his parliamentary immunity. However, the immunity would not cover the jail sentence - which would be enforced anyway because it would be a definitive one (although in practice it would almost certainly amount to house arrest, given Berlusconi's age). 

• A majority of Italian Senators could potentially overturn the Supreme Court ruling on this point. This would mean that Berlusconi would not have to resign as a Senator, and would be allowed to stand for election in future.

Interestingly, Prime Minister Enrico Letta's centre-left Democratic Party (currently in a coalition with Berlusconi) could face a lose-lose situation there:

• If the Democratic Party helped vote Berlusconi out of parliament, it could put the government at risk.

• If the Democratic Party voted against the public office ban, it would presumably annoy many of its voters and allow Berlusconi to continue to exert direct influence on Italian politics. It would also provide ammunition to someone like Beppe Grillo, who would instantly claim that 'La Casta' (the caste) has closed ranks to protect Berlusconi. Of course, the Italian Senate going against a Supreme Court ruling would also be a pretty big thing.

Now, we have the joy of waiting for the verdict. Stay tuned @OpenEurope and @LondonerVince.

Is Italy already heading for fresh political uncertainty?

Last month, we wrote on this blog that Silvio Berlusconi's well-known 'Ruby trial' posed no immediate threat to the stability of Italy's coalition government. Instead, we noted, the real risk was the less titillating 'Mediaset trial' - where Berlusconi is accused of tax fraud and could be banned from holding public office for five years.

Recent events seem to prove us right. Italy's Supreme Court has announced that it will issue the final verdict in the tax fraud trial on 30 July - much earlier than expected. The announcement has triggered a huge backlash from Il Cavaliere's camp and is showing once again just how fragile Italy's coalition government is.

Berlusconi's party wants to suspend all parliamentary activities for three days in protest against the Supreme Court's decision, or it will pull out of the coalition - which would deprive Enrico Letta's government of its majority in parliament and potentially make snap elections a real prospect.

The impression is that, even if this immediate threat were turned down, the survival of the Italian government may be put in doubt again shortly should the Supreme Court uphold the five-year public office ban for Berlusconi - making it definitive.

In the meantime, Standard & Poor's yesterday cut Italy's credit rating by one notch to BBB, leaving it on a negative outlook and only a few notches above 'junk' level, citing concerns over economic output growth as a key reason for the decision. A gentle reminder that the country remains under market surveillance and the way out of the woods is still quite long.

A bad time to trigger a fresh political crisis.