- Italy faces limbo after Berlusconi agrees to go
- Guantanamo hearing to be beamed to U.S. viewing sites
- Plan for technocrat to lead Greek unity govt hits snag
ROME (Reuters) - Italy looks set for lengthy political uncertainty after Prime Minister Silvio Berlusconi's pledge to resign, with his centre-right party calling for elections and the main opposition for a national unity government.
After failing to secure the majority in a vote in the lower house, Berlusconi said he would quit as soon as parliament passed budget reforms urged by European partners to help Italy stave off a debt crisis that is threatening the euro zone.
"We no longer have the majority we believed we had so we need to recognise this and concern ourselves with what is happening on markets...we need to show markets we are serious," Berlusconi told Italian television by telephone.
Votes to pass the reforms in both houses of parliament are likely this month, and opposition leaders may try to bring this forward in order to end as soon as possible the flamboyant billionaire media tycoon's 17-year dominance of Italy.
Worries about the Berlusconi government's ability to implement reforms to boost Italy's sluggish growth and cut its huge debt have helped fuel a rise in Italy's borrowing costs to unsustainable levels, weighing on the euro and stock markets.
Global equity markets and the euro rose after Berlusconi's decision on hopes that a new leader will act more aggressively to tackle the crisis in the euro zone's third largest economy that is jeopardising Europe's single currency project.
The 75-year-old prime minister and his party say an election is the only realistic next step but opposition leaders have called for the formation of a national unity.
President Giorgio Napolitano said he would start consultations with all political parties after the new budget measures are approved.
When a government is defeated or resigns, it is the president's duty to appoint a new leader to try to build a majority in parliament, or to call new elections.
Pier Luigi Bersani, leader of the opposition Democratic Party, called for the beginning of a new phase and reiterated the proposal to form a transitional government including representatives from across the political spectrum.
But members of Berlusconi's centre-right People of Freedom (PDL) party, whose support would be needed for a broad-based government, said its formation would be difficult.
"All the leaders of the PDL prefer early elections, because it's hard to imagine a government of national unity," Education Minister Mariastella Gelmini told Italian television, pointing to major disagreement among political parties.
Berlusconi and his closest allies have also said that the appointment of a government of technocrats -- an option favoured by markets and it is thought Napolitano -- would be an undemocratic "coup" that ignored the 2008 election result that brought the centre right to power.
EU Economic and Monetary Affairs Commissioner Olli Rehn said on Tuesday that EU inspectors are due to arrive in Rome on Wednesday to begin a monitoring mission aimed at ensuring economic reforms are carried out as part of an agreement reached at a G20 summit last week.
Even when Berlusconi goes, there is no guarantee that reforms will be quickly implemented and relief on markets may not last long.
Yields on Italy's 10-year benchmark bonds rose to 6.74 percent on Tuesday, near levels at which Portugal, Greece and Ireland were forced to seek a bailout.
(Editing by Louise Ireland)
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GUANTANAMO BAY U.S. NAVAL BASE, Cuba (Reuters) - Members of the U.S. public will be allowed to watch a broadcast of Wednesday's arraignment hearing for a Guantanamo prisoner accused of masterminding a deadly attack on a U.S. Navy warship, but only if they can get to an army base in Maryland by Wednesday morning.
The chief judge in the Guantanamo war crimes tribunal signed an order on Monday granting permission for the public to view the closed-circuit broadcast being beamed to the Fort Meade Army base in Maryland.
The order was made public late on Tuesday, giving potential viewers little notice.
Defendant Abd al Rahim al Nashiri is to be arraigned at the Guantanamo Bay naval base in Cuba on death-penalty charges that include murder, attempted murder, conspiracy and terrorism.
The 46-year-old Saudi captive is accused of conspiring with al Qaeda to launch the October 2000 attack on the USS Cole in the Yemeni port of Adan.
Suicide bombers detonated a boat full of explosives alongside the Cole and blew a gaping hole in its side, killing 17 U.S. sailors and wounding three dozen more.
Nashiri's hearing in the military tribunal at the remote base in eastern Cuba will be the first beamed to the United States for viewing, albeit at restricted sites.
Relatives of the dead and wounded sailors were invited to watch at a private screening at the Navy base in Norfolk, Virginia, the Cole's home port. Journalists who could not make the trip to Guantanamo for the hearing were notified earlier that they could watch it at Fort Meade.
The Guantanamo judge, Army Colonel James Pohl, granted prosecutors' request to widen the access to additional spectators "due to the serious nature of the crimes alleged and the historic significance" of the prosecution.
The hearing will be the first for Nashiri, an alleged high-level al Qaeda operative who was captured in 2002 in Dubai and held in secret CIA prisons before being sent to Guantanamo in 2006. The CIA has acknowledged subjecting him to mock executions and the simulated drowning technique known as waterboarding, which defense lawyers called torture.
Pentagon officials said U.S. congressional staffers planned to take advantage of the invitation to watch the hearing from Fort Meade, as did other military lawyers.
They will face the same restrictions imposed at Guantanamo, namely that they may not photograph or record any part of the proceedings.
The Guantanamo tribunals for suspected terrorists have been widely criticized as secretive and rigged to convict.
Brigadier General Mark Martins, who took over as Guantanamo's chief prosecutor six weeks ago, said the military was addressing some of those issues by making Guantanamo court documents and transcripts more readily available and through the broadcasts just announced.
"The Supreme Court has said that the people of an open society do not demand infallibility of their institutions, but it is difficult for them to accept what they cannot observe," Martins told journalists at Guantanamo. "Transparency is good, democracy requires it."
(Editing by Christopher Wilson)
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ATHENS (Reuters) - A plan for former European Central Bank vice-president Lucas Papademos to lead a Greek government of national unity has run into trouble, party sources said on Wednesday, prolonging political hiatus as the country heads towards bankruptcy.
With the Greek population and the European Union clamouring for a coalition now, a government source said it would be announced later on Wednesday -- but signalled that negotiations were far from over.
In the past two days government sources have made a number of optimistic predictions about forming the government, which must secure a 130-billion-euro ($180-billion) bailout from the euro zone, only for no deal to materialise.
The socialist and conservative parties had wanted Papademos, a Greek economist well known in European capitals, to head the new government, aiming to re-establish an international credibility that the politicians lost long ago.
But sources in both parties said this was now in doubt and the two sides were looking at other options.
"The Papademos candidacy has hit problems that have to do with both parties," one of the sources told Reuters on condition of anonymity.
Some Greek media reported that Papademos was setting conditions that the parties would not accept, and others that there were objections from Finance Minister Evangelos Venizelos, because Papademos wanted to change the government's economic team.
Greek media have mentioned parliamentary speaker Filippos Petsalnikos and socialist lawmaker Apostolos Kaklamanis as alternative premiers, but both have denied the reports that they had been picked.
Earlier, the government source said outgoing Prime Minister George Papandreou would meet the Greek president at 1000 GMT on Wednesday, and the coalition would be announced the same day.
However, he also said negotiations would continue, signalling that the elusive deal on a government which is due to rule until early elections in February, had yet to be struck.
The stakes could not be higher. Greece must have a new coalition to secure the bailout, negotiate the release of emergency funds from the EU and IMF to avoid bankruptcy when big debt repayments come due next month, and safeguard its place in the euro zone.
On the other hand, the European Union needs to put out the fire in Greece to prove to international financial markets that it can tackle another blaze in Italy, a far bigger economy also heading for economic and political crisis.
To Vima news website expressed the exasperation felt by Greeks with all their political leaders, especially Papandreou and conservative opposition leader Antonis Samaras.
The website evoked a national fear that Greece might lose its euro zone membership, and be cast adrift to survive alone with its old currency.
"Despite its huge defeat, our political system won't get serious at the time when the country is threatened with complete collapse, wavering between the euro and the drachma.
"Mr Papandreou and Mr Samaras agreed on Sunday on a government to save the country and are now doing whatever they can to undermine it before it even starts its work," it said.
Adding to the confusion, conservative leader Samaras became embroiled in a dispute within his New Democracy party and a related row with the European Union.
Party political sources said some New Democracy lawmakers were accusing Samaras of giving away too much, especially when he agreed to accept austerity measures in the bailout package.
Samaras had long argued that the spending cuts, tax rises and job losses imposed by the outgoing socialist government under orders from the EU and IMF had deepened Greece's crippling recession, now in its fourth year.
A New Democracy party source refused to accept the party was the main problem, but acknowledged internal divisions since Samaras staged his U-turn on the package last week, helping to open the way for Sunday's agreement in principle.
"Parts of New Democracy are causing trouble. Many party officials around Samaras don't like the way things are going," the source said on condition of anonymity.
Under pressure from party dissidents, Samaras attacked the EU for demanding written undertakings from Greece that it would stand by its promises to implement the bailout package which euro zone leaders agreed last month.
European Economic and Monetary Affairs Commissioner Olli Rehn made the demand, exasperated by Greece's record of making promises on tackling its huge debt and budget deficit and then falling short of fulfilling them.
Rehn singled out a decision by Papandreou last week to call a referendum on the bailout, a vote which might have seen Greeks reject the package because of the austerity measures tied to it. Papandreou backed down, but was forced into agreeing to make way for the unity coalition.
Speaking in Brussels, Rehn said Greece had breached confidence with the EU by calling the referendum. Now Brussels needed undertakings to release even the next 8-billion-euro instalment of funding for Greece under its original bailout package, pulled together last year.
"This confidence needs to be mended," said Rehn. "Finance ministers of the euro area expect that there is ... a written commitment, a written confirmation of the commitment of a broad-based government of national unity."
A government source said the EU wanted Samaras to sign, along with the new prime minister, finance minister, central bank governor and outgoing Prime Minister George Papandreou.
The New Democracy response was blunt. Samaras hinted in a statement he might give no written assurances because his spoken word was enough. "It's a matter of national dignity ... I don't allow anybody to doubt my statements," he said.
(Additional reporting by Lefteris Papadimas; Writing by David Stamp; Editing by Louise Ireland)
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