Foreign desk

 By James Mackenzie

    ROME, Nov 3 (Reuters) - Italian premier Silvio Berlusconi

has made a calculated bid to joke his way out of the latest
scandals over girls and parties but his allies are not laughing
and the future of his centre-right government is at risk.
    Italy has been transfixed for days by the story of a
teenaged nightclub dancer known as Ruby who received 7,000 euros
from Berlusconi after attending a party at his sumptuous private
villa outside Milan earlier this year.
    The prime minister himself has shrugged off the storm of
criticism which has come his way over the incident, even stoking
the outrage with his trademark brand of provocation by remarking
"it's better to like beautiful girls than to be gay."
    Berlusconi has survived previous scandals over parties and
prostitutes and he insists that he will remain in office until
his term ends in 2013, despite coming under fire from groups as
diverse as Catholic bishops and gay rights groups.
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    Berlusconi's comments on scandal
    Political risks in Italy
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    The strategy is a deliberate one, according to Maurizio
Pessato, head of polling firm SWG, who said Berlusconi was
speaking over the heads of the opposition and political
commentators and directly to his core electorate.
    "He has gone on the attack, he's saying: 'If you want me,
I'm a man, I go with women, that's what I'm like'," he said.
    "It's what a lot of Italian men are like and that appeals to
a lot of Italian families. It's a very traditional, even
conservative position. It's not certain that it will work but
that's the approach he's taking," he said.
   
    CREDIBILITY
    So far, opinion polls have shown little impact from the Ruby
scandal with a survey of 500 people by pollsters Piepoli on
Wednesday showing Berlusconi's personal approval rating stable
at around 50 percent.
    But the latest incident has alarmed even some of his closest
supporters, including Umberto Bossi, the leader of his coalition
partners in the federalist Northern League, who said the scandal
risked damaging Italy's international credibility.
    "A bit, yes, because the country has to sell its bonds," he
told reporters after a meeting with the prime minister in Rome
on Wednesday.
    He said the government would survive the upset but he also
said the Northern League would wait until January when its
treasured federal reform project giving more power to the
regions comes up on the government agenda.
    "After that, we'll see," he added.
   
    INSTABILITY
    The future of the government was already in some doubt after
the dramatic split in July with Gianfranco Fini, the speaker of
parliament who co-founded the ruling PDL party with Berlusconi
and who has since been the prime minister's most bitter rival.
    A raft of problems awaits in coming months, from
Berlusconi's own trial for alleged corruption -- currently
suspended pending a decision by Italy's constitutional court --
to sensitive reforms to the tax and justice systems.
    Fini appears to have little interest in provoking an
election at this point, preferring to manoeuvre for the creation
of a viable alliance with centrist groups that could form the
basis of an interim government if Berlusconi fell.
    But the potential risk of a government crisis was underlined
this week by ratings agency Standard and Poor's.
    S&P's affirmed its A+ long-term rating on Italian debt but
warned that the wrangling of the past few months could pose a
problem in the longer term to Italy, which has one of the
highest public debt levels in the euro zone.
    "In our view, potential political instability could be a key
risk for future fiscal and economic policy," it said.
    Most commentators believe that an election early next year
is the most likely scenario and with the chronically feeble
centre-left opposition posing little threat, opinion polls
suggest Berlusconi would probably win the lower house.
    However the polls also suggest he would probably lose
control of the Senate, making governing difficult and for many
commentators the 74 year-old prime minister faces one of the
most serious crises of his long career.
    "This is not a passing crisis," said Pessato. "It could last
a year, six months, I don't know but we are moving towards the
post-Berlusconi period."
 (Editing by Philippa Fletcher)