Berlusconi rejects Prodi victory

ROME - Prime Minister Silvio Berlusconi has rejected centre-left leader Romano Prodi's claim to victory in general elections and alleged widespread voting irregularities, throwing Italy into political chaos.

But the 69-year-old leader proposed an alternative to a protracted dispute over the closest election in modern Italian history, saying his rivals should consider forming a broad coalition bridging the right and left as in Germany.

Such a coalition, however, seemed unlikely with official data showing Prodi's broad alliance had won control of both houses of parliament and with it a claim to power.

"No one can claim victory at this point," Berlusconi, flanked by leaders of his centre-right bloc, told reporters, saying there had been irregularities with overseas votes that needed to be investigated.

The centre-left accused Berlusconi of seeking to subvert the election result, a reaction that made its acceptance of a German-style coalition look even more improbable.

A sombre Berlusconi spoke hours after Prodi had declared victory to cheering supporters and won congratulations from two European partners.

Prodi claimed victory in the April 9-10 vote after returns showed his centre-left coalition, ranging from communists to Catholic centrists, had won control of the lower house of parliament for the first time since 2001.

"We can govern for five years," Prodi said on Tuesday. "My government will be politically and technically strong."

Minutes before Berlusconi spoke and some 28 hours after polls closed, provisional official data showed Prodi's alliance had also won wafer-thin control of the Senate upper house.

But Berlusconi said thousands of ballots were in dispute - more than Prodi's 25,000-vote margin of victory in the lower house - and needed to be checked.

"We will not hesitate to recognise the political victory of our adversaries, but only after the votes have been legally checked," Berlusconi said in his first public comment on the election.

The Interior Ministry, which oversaw the count, said 1.1 million votes had not been taken into consideration for the lower house because they had been spoilt or left blank.

However, the ministry said in a statement that 43,028 of these annulled ballots were "disputed", indicating that there were doubts over whether they really had been spoilt or not.

Berlusconi said he wanted those disputed votes reviewed.

He also said there were "many irregularities" in votes from Italians living abroad. This foreign vote proved crucial in the Senate, giving Prodi a two-seat advantage over Berlusconi.

The sharply divided vote and the prospect of a protracted battle over the outcome raised the spectre that political gridlock would delay the naming of a new government and with it Italy's prospects of reviving its stagnant economy.

"There would be a massive period of uncertainty," Bank of America senior economist Holger Schmieding said of a possible recount, likening the uncertainty to the 2000 US presidential election which ended in a bitter recount battle in Florida.

Earlier on Tuesday, Milan's stock market fell and the cost of government borrowing rose over concern about the political uncertainty.

Markets worried that Prodi would be a lame duck premier, unable to enact reforms, cut Italy's debt or tackle its budget deficit.

"It's highly unlikely that the kind of majority we will see can pass the necessary reforms," Susana Garcia of Deutsche Bank said.

Before Berlusconi spoke, President Carlo Azeglio Ciampi, in an apparent bid to head off any messy battle over the result, issued a statement praising the "orderly and correct" voting process.

And in a snub to Berlusconi's alliance as it held back from conceding, France and Luxembourg offered the first international stamps of approval for Prodi's coalition.

But frustrated Italians feared paralysis and instability.

"I think we'll have a government that lasts six months," said Pietro Bianchi, a Milan banker.

- REUTERS