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Italians again put faith in Berlusconi as premier
The Wall Street Journal
15 Aprile 2008
Nation stili struggles with issues plaguing itfor thepast decade
Conservative leader Silvio Berlusconi pulled off another one of his signature comebacks, decisively winning Italian elections just two years after being voted out of office.
Now the question is whether he can deliver on a promise he made 14 years ago when he was first elected prime minister: Haul the country out of a prolonged politicai funk that has sucked the vitality out of its economy and drained its citizens' faith in its leaders.
Mr. Berlusconi—always confounding his critics—mustered a better showing than many had predicted. Though votes were stili being counted, he appeared set to claim at least a 25seat majority in the Senate and a similarly wide margin in the lower house, giving him ampie leeway to govern.
His main rivai, former Rome mayor and leader of the leftleaning Democratic Party, Walter Veltroni, called him Monday evening to concede defeat. As of late Monday night, the usually ebullient Mr. Berlusconi, who was monitoring the results from his villa outside Milan, hadn't made a statement.
As the 71yearold Mr. Berlusconi prepares to form the 57th government in the 60year history oi the Italian Republic, he doesn't enjoy the sanie fervent popularity he once did. Moreover, unlike Germany, which took painful steps te trimits generous socialwelfare benefits, held back wage increases and boosted worker productivity, Italy is stili struggling with many of the same problems it faced a decade ago. With its stalled economy and declining productivity, the country is an increasing burden on its European neighbors.
Many economists think Italy is on the verge of tipping into a recession. Ratings firms rank its credit at the bottom among its European peers and alongside Cyprus and Kuwait. Years of large budget deficits and a crushing debt load mean the country has few resources to stimulate the economy. Average salaries languisti at the bottom among the wealthy nations that make up the Organization for Economie Cooperation and Development.
Beneath the economie woes lurks a deeper problem—a profound cynicism about the politicai class's ability to bring about lasting change. When Mr. Berlusconi first charged into politics in 1994, after amassing a fortune in television, publishing and real estate, he promised to reìnvigorate the country.
Then, as now, Italy was trying to emerge from a politicai and economie morass. Most of the country's ruling class had been toppled in a sweeping bribery scandal called Tangentopoli.
At the time, Mr. Berlusconi, then 57 years old, offered a fresh face and a cando approach. He was swept to power just a fewmonths after entering politics. Yet his government lasted only nine months, and he too was soon caught up in the bribery scandal.
Since then, the country has lurched betweem a succession of centerleft and centerright governments, including a fiveyear stint by Mr. Berlusconi, while its econiomy has been stuck im neutral. Little headway has been made on ageiold problems such as extcessive bureaucracy and a clogged court system.
"I'm nauseated withi politics at this point," said Alberto Crissà, a 67yearold retired scheool teacher. Mr. Crissà said he cast a reluctant vote for Mr. Berlusconi because he considered the alternaitives to be even worse. He doesn't expect the election outeome to resolve any of his most pressing conceirns, such as his dwindling spending power as a pensioner or his woirries about crime.
"We're just waiting f'or the crisis to come," he said.
There is a widespread feeling that while the rest of Europe has moved forward—building highspeed trains and investing in research and development—Italy has been frozen in time. In some cases, things have gone backwards.
Naples, the country's thirdlargest city, was buried in garbage for many months earlier this year after locai dumps filled, and authorities couldn't find any place to put the trash. Despite numerous governmentrescue plans, Alitalia SpA is stili teetering on the brink of bankruptcy. Air FranceKLM offered to buy the airline, but ìt recently cut off negotiations after it met with intractable union demands.
Many of the country's politicians, including Mr. Berlusconi, are the same ones who were elected more than a decade ago. The country's president, Giorgio Napolitano, is 82. Romano Prodi, the outgoing prime minister, is 68.
Italian press marveled this week at Spanish Prime Minister José Luis Rodriguez Zapatero's decisionto appoint a 37year old woman, seven months pregnant, as his defense minister.
"We're in a transitional phase, and we've been in one since 1993," says Cristian Vaccari, a political scientist at the University of Bologna, referring to the apex of the Tangentopoli bribery scandal. "So how long is it going to last? Everything is stili chaotic, stili in flux."
There is wide consensus that the current flux will only end once Italy overhauls its arcane electoral law. The law, rushed through by Mr. Berlusconi in 2005 during his last stint as prime minister, allows even tiny parties to gain representation in Parliament.
While small parties have always crowded Italy's politicai landscape, they proliferated under the recent law, stunting the formation of lasting leftright voting blocs. This has made it difficult to form cohesive coalitions that can govern effectively. Mr. Prodi headed a coalition of nine separate parties who quarreled over everything from a military mission in Afghanistan to the future of Alitalia.
Mr. Berlusconi can claim a much wider margin in Parliament than his predecessor. But he, too, is likely to have a hard time getting his alliance, which includes several small parties, to agree to a dramatic overhaul of the electoral law.
If a new electoral law isn't approved quickly, it may be decided by a popular referendum, currently scheduled to be put to a vote in early 2009. The referendum seeks to establish a system that would make it difficult for small parties to survive.
The issue of electoral overhaul is tricky for Mr. Berlusconi. As soon as a new law is in place, there will be growing pressure to go to elections again under the new rules—ushering in yet another government.
Even bef ore a new electoral law is approved, Mr. Berlusconi will be hard pressed to demonstrate that he can do a better job of managing the economy than Mr. Prodi did. Italy had zero growth in 2005, the last full year of Mr. Berlusconi's rule. While Mr. Berlusconi has promised tax cuts and the launch of massive infrastructure projects such as a bridge linking Sicily to the mainland, it is unclear where he will be able to find the money to pay for it ali.
Ratings firms, which have downgraded Italy three times in the past four years, are watching Mr. Berlusconi closely. Deficit spending soared under his last government, reaching 4.4% of gross domestic product. While Mr. Prodi was able to reduce that to less than 2% during his brief stint as prime minister, the feat was achieved largely through a highly unpopular crackdown on Italy's rampant tax evasion.
Even during the campaign, Mr. Berlusconi, who is currently facing charges of tax evasion relating to his media empire, hinted that he thought there was a moral justification for evading taxes that were too high.
"The country doesn't have much wiggie room," says Brian Coulter, a sovereignratings analyst for Fitch Ratings. "The economy has stuttered to a halt again," ne says.
BY GABRIEL KAHN
Source > The Wall Street Journal
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