Silvio Berlusconi

Europe's comeback king

PUBLISHED : Saturday, 19 April, 2008, 12:00am
UPDATED : Saturday, 19 April, 2008, 12:00am

In spite of Silvio Berlusconi's dubious economic track record, unconvincing plan to save Italy from its fourth recession in a decade and legal problems, Italians this week handed back the reins of power to the billionaire's centre-right alliance.

The crushing defeat of his centre-left opponent, former Rome mayor Walter Veltroni, crowns the media mogul as Europe's comeback king and condemns Italy's left-wing parties to near exclusion from political life.

For the first time in 116 years, the Italian Socialist Party will have no representation in parliament.

Mr Berlusconi's conservative bloc commands a majority of 42 seats in the Senate (compared to his predecessor Romano Prodi's one-seat lead) over the 132 won by Mr Veltroni's Democratic Party and its ally, the anti-corruption movement Italy of Values. It also holds an advantage of about 100 lawmakers in the lower house.

The majorities guarantee the prime minister-elect much-needed stability.

But the day after his victory, the media mogul and owner of AC Milan soccer club, seemed less cheery than usual, telling a press conference: 'I am moved by the victory, but also worried. We don't do, or promise, miracles, the months and years ahead will be difficult. But I'll use my experience over the next five years to modernise the country'. His tired voice and surgically lifted forehead covered in sweat confirmed his statement. Already Mr Berlusconi no longer appeared to be a man of miracles.

Miracles however, are exactly what Mr Berlusconi needs for a government born mainly out of the extraordinary electoral success of the xenophobic and secessionist Northern League party, which more than anything contributed to the victory of the centre-right.

And it is with them that Il Cavaliere, 'The Knight', as Mr Berlusconi is known, will have to perform the miracle of compromise if he wants to see out his next five years in government. The League is now the third largest party in Italy, and it has the power to topple the government.

Mr Berlusconi, who made his fortune in property and the media before entering politics, creating his own party in the 1990s to fill the gap left by the implosion of the Christian Democrats and to 'save' the country from the left, has a complex history with League leader Umberto Bossi.

In 1994 when he won the elections for the first time, Mr Berlusconi resigned after only eight months when the Northern League or Lega Nord party under Mr Bossi abandoned him. That December, in front of dozens of television cameras, Mr Berlusconi promised: 'I will never again make an alliance with Lega Nord!'

Seven years later, in 2001, the media mogul was campaigning again, presenting himself as the man to solve all of Italy's economic problems. At his side was Mr Bossi and his Northern League party.

Mr Berlusconi won the elections but instead of solving Italy's economic woes, he protected his business interests with a desire to be loved by everyone. During his five-year reign, Italy suffered three small recessions.

Mr Bossi did not have much of a chance to influence the government's decisions during this period. On March 11, 2004, he was admitted to hospital in grave condition after suffering a stroke. His rehabilitation, including a long hospital stay in Switzerland, caused a big interruption in his political activities. But now, Mr Bossi, nicknamed 'The Senator', is back. And, as he confirmed the day after this week's elections, he intends to achieve his goals. 'Either they make our reforms or, this time, I will lose my patience,' he said.

Mr Berlusconi responded by saying, 'We will not be hostages of the Lega Nord'. Yet he failed to explain how he would manage to resist the will of Mr Bossi's anti-nationalist and anti-European-Union party. The Northern League proposes a law that would transform Italy into a federal state, with what Mr Bossi loves to call 'the soft secession of Northern Italy' seen as the first step.

It is an idea that Mr Berlusconi's other ally, Gianfranco Fini, will certainly not like. Mr Fini is a former neo-fascist and now the head of the National Alliance party, which proposes a national unity government.

The new government's political projects are a headache for the European Union as they do not come close to the demands of Brussels, particularly with regard to rules on public finance. The billionaire has a history of letting the budget deficit rise. To overcome a worsening economic crisis, Italy needs wide structural reforms. Last week, the International Monetary Fund predicted that Europe's fourth biggest economy would expand by just 0.3 per cent this year.

Mr Berlusconi has pledged to eliminate taxes on property, inheritance and gifts. At the same time, he has vowed to help revive the ailing economy through increased spending on infrastructure, including a bridge to Sicily, a project killed by the Prodi government, and more highways.

How he would balance lower taxes and higher spending has not been explained clearly, beyond some talk of privatising some government assets.

While Mr Berlusconi likes to portray himself as an economic liberal, there is no doubt economic nationalism is close to his heart. He has vowed to keep Alitalia, the near-bankrupt airline of which 49.9 per cent is owned by the Italian state, out of foreign hands. Air France-KLM has walked away from exclusive talks over union demands but has said its offer for the airline remains on the table. Mr Berlusconi called Air France's offer 'unacceptable and, indeed, offensive to our country'.

He added 'if we sell Alitalia to the French, they will use our company to augment flights to France'. This week, Joaquin Almunia, the EU economic and monetary affairs commissioner, had a clear message for Italy's new government: 'Italy must continue with the consolidation of public finances in order to permit the Italian economy to avoid the risk of another crisis.'

Martin Schulz, leader of the Party of European Socialists in the European Parliament, predicts 'difficult times between Italy and the European Union'.

In an interview in the German daily Der Tagesspiegel, Mr Schulz said the EU 'shouldn't expect much help from the Berlusconi government on larger questions regarding the continent, such as the fight against crime and financial transparency'.

On his political style, Mr Schulz said: 'Berlusconi is definitely closer to [French President Nicolas] Sarkozy. 'With his victory one should expect a growing dramatisation in a sensationalist sense in Italian politics.'

Mr Berlusconi's victory has radically changed the Italian political scene, to the extent that some big Italian newspapers are calling it the 'Third Republic'.

Italy's next government will be strictly right-wing, an unusual event in Italian history. The absence of large coalitions for the first time has enormously simplified the political scene, making the parliament more similar to the British system.

This new scenario, with decisive majorities in both houses, offers stability in government. Italy is in desperate need of reforms, a strong economic boost and structural innovations. Mr Berlusconi has the numbers to work with - there can be no excuses this time.