Updated - Adds comment by Jeffrey Pullicino Orlando.

Franco Debono said today that he would not challenge Lawrence Gonzi for the leadership of the Nationalist Party.

"Definitely not," he said when questioned by timesofmalta.com.

Tourism Minister Mario de Marco, MEP Simon Busuttil and MP Beppe Fenech Adami have also said they will not contest.

Dr Debono maintained his 'no comment' when asked about developments since the no confidence debate on Thursday.

Dr Gonzi's call for a leadership contest in the Nationalist Party was made yesterday after Dr Debono abstained in a no-confidence vote in Parliament in Thursday.

Informed sources said that although mediation efforts between the Nationalist Party and Dr Debono had not made much progress so far, the remarks made yesterday by Dr Gonzi could have an impact.

"In admitting that mistakes had been made, and in shouldering responsibility, Dr Gonzi conceded a lot and that could have an impact in the efforts now underway," the sources close to Dr Debono said.

"The fact that he (Dr Gonzi) called a leadership contest shows how unusual the situation is." However, the sources said that the issue needed to be resolved within the corridors of government, not the PN.

"The issues raised by Dr Debono centre on responsibility and accountability in the running of sections of the government, and on the need for reforms. However, holding a leadership election should turn some of the focus on the PN, and the councillors should be asking questions on how the party is being run, the state of its finances, the eligibility of councillors to vote, and party funding legislation.'

Dr Debono has not said yet how he will act in Parliament, once the no-confidence vote was defeated with the Speaker's casting vote.

A source in the Nationalist Party said efforts were continuing to resolve the issues with Dr Debono.

As to the pending bills in parliament, including a Bill to amend the Budget measures, the PN source pointed out that the last Labour government had most of its Budget votes approved through the casting vote of the Speaker (the chairman of committees). Furthermore, he pointed out, once Dr Debono had voted in favour of the Budget, it would not make sense for him not to back the Budget measures implementation bill.

"That Dr Debono abstained in the no-confidence vote means that he wanted to send a message, but he did not want to topple the government," the source said. That meant that compromise and agreement remained possible, he added

Yesterday, Foreign Minister Tonio Borg said a private member's bill on party funding, tabled by Dr Debono, was a good basis for legislation on the subject. Prime Minister Gonzi also expressed agreement with the principle of the legislative recommendations made by Dr Debono, saying he had given every word he had said its due importance. He however disagreed with Dr Debono's methods.

The sources close to Dr Debono said Dr Gonzi's decision to call a leadership vote was an 'exercise in futility' as the country was being kept waiting. By the same yardstick Dr Gonzi had imposed on himself, he should have submitted his resignation to the President, since he had not had a majority in Parliament.

It should have been up to the President to decide whether or not to accept the resignation. It was likely that the President would not have accepted it (since the no-confidence motion was not approved). It was at that stage that Dr Gonzi should have sought the PN leadership contest.

As for the voting in parliament, the sources said Dr Debono might still opt to abstain, as he did on the no-confidence vote, in which case business such as the Budget Measures Implementation Bill would have to be carried with the Speaker's casing vote.

Dr Debono has persistently - and with considerable stamina - called for ministers to shoulder responsibility for their failures and he presented a long list of proposals for updating of the Constitution, legislation on party funding, a reform of the Broadcasting Authority Act, a reform of libel laws, a reform on the method of appointment of the President, a reform of the role of magistrates (including inquiring magistrates) and a reform of the role of the Attorney General, among others. He said his proposals stemmed for his experience as one of the busiest criminal lawyers, as well as his research into institutional issues.

Meanwhile, Nationalist MP Jeffrey Pullicino Orlando said he absolutely disagreed with having contests on the leadership of the PN at this stage. Dr Gonzi had been elected as the leader of the party and, Dr Pullicino Orlando said, he had also backed him, democratically.

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