Silvio Berlusconi has been a staunch Bush ally in the war against Islamofascism. But will inflation going up and unemployment at about 10%, his support has been eroding and in early April his coalition lost 12 of 14 local elections.

Because of this, and because four minor cabinet members (from the Union of Christian Democrats party) resigned last week and others are threatening to follow suit, Berlusconi has tendered his resignation:

Under Italy’s constitution, a prime minister is obliged to step down if he makes major cabinet changes. He will now try to rebuild his support through a ministerial shuffle and by doling out patronage in Italian state industries and perhaps government-run television.

Berlusconi has been in power for four years; general elections are scheduled for next spring. On Thursday and Friday, Ciampi will consult with political leaders before deciding whether to give Berlusconi a chance to reconstitute his cabinet. In the meantime, Berlusconi will stay in office as a caretaker.

In theory, President Ciampi could call for early elections but is expected to allow Berlusconi the opportunity to put together a new cabinet and rebuild his coalition government.

In a speech to the Italian Senate, Berlusconi said:

Government partners “have all demanded a new government, to be based on the same coalition,” Berlusconi said. “I accept this challenge.”

A new government, but with the same players. I love Europolitics.

Then there’s this bit of analysis from the NYTimes:

This time, some analysts suggest, the crisis was prompted by his coalition parties seeking greater exposure as Mr. Berlusconi’s uncontested leadership of the governing coalition begins to crack.

“There was no reason for this crisis, it was only to give visibility to his allies,” said Piero Ostellino, a political editorialist for Corriere della Sera, who suggested that the Union of Christian Democrats, the centrist party that pulled four ministers last Friday, was trying to boost its standing with voters as it considered merging with other centrist forces to create a new party that would run in the 2006 elections.

“It’s possible they’re considering the reconstitution of a Christian Democratic party,” he said.

Fascinating stuff.