Prime Minister Silvio Berlusconi has promised to resign from office once parliament passes his government's latest economic austerity package, according to a statement released tonight from the office of President Giorgio Napolitano.
The announcement comes after Berlusconi won a key vote on Italy's budget today, but failed to win a majority of support in parliament, intensifying calls for him to step aside.
The statement from Italy's president says that Berlusconi "expressed great preoccupation for the urgent need to respond quickly to our European partner's requests by approving the (financial) Law of Stability. Once this has been done, the prime minister will remit his mandate and the head of state will proceed to consultations."
The economic reform package is expected to be debated in parliament at the end of next week. Once Berlusconi offers his resignation, Napolitano is expected to consult with party leaders about forming a new government or holding elections.
The Italian prime minister has suffered a series of major political and personal setbacks in recent years, but had always vowed to remain in power.
Despite the personal scandals that have embroiled Berlusconi, it's the European debt crisis that has ultimately been his undoing. Italy's borrowing rates have risen to unprecedented highs, raising concern that the country may not be able to pay back its debt. Italy is the Eurozone's third-largest economy, with debts of around $2.6 trillion, and is seen as too big to bail out.
With or without Berlusconi, Italy will continue to come under pressure to reassure markets by pushing through economic reforms and reduce government debt.
The Italian prime minister is the latest casualty in the economic storm that has claimed the scalps of all the other leaders of the countries hit hardest by the crisis: Ireland and Portugal have seen their governments leave office, while Spain's José Luis Rodríguez Zapatero has said he will not seek re-election later this month, and Greece's George Papandreou has said he intends to make way for a new coalition government.
Italy's economic crisis has been fueled by the controversies that have continued to dog Berlusconi ever since he first came to office in 1994. He's been accused in Italy's courts of having sex with an underage prostitute and abusing his power to cover it up, holding alleged "bunga bunga" parties or lavish orgies, embezzlement, tax fraud, false accounting, and attempting to bribe a judge.
He has never been convicted, but even his supporters have come to believe that Berlusconi has become bogged down in scandal and preoccupied with the legal challenges against him.
According to intercepts released by prosecutors earlier this year, Berlusconi called himself a "spare-time prime minister" while chatting to an alleged prostitute and arranging business contacts for a pimp.
On the world stage, Berlusconi has also become infamous for his gaffes and "colorful" pronouncements. In 2003 he advised international investors to do business in Italy because "we have beautiful secretaries." He described President Obama as "sun-tanned" in November 2008.
Speaking to Italian television by telephone tonight, Berlusoni said elections early next year now seem unavoidable. If he can recover some of the political support that has recently lost, as well as continue to survive the legal trials that beset him, it's not entirely inconceivable that Italy's longest-serving prime minister since World War II might live to fight another day.