Italy needs political reform

Italy is once again going through a political crisis after the collapse of Romano Prodi's government. Mr Prodi resigned after the withdrawal from his centre-left coalition of a small Catholic centrist party, led by Claudio Mastelli, who had served as Justice Minister, and who, together with his wife, was under investigation for corruption.

The government's reliance on such a small party clearly highlights the need for electoral reform in Italy. There are currently 39 parties represented in Parliament, nine of which were in the governing coalition, and which ranged from Catholics to Communists. This wide spectrum of parties was always going to be a problem for Prodi and it is perhaps surprising that he survived in office for as long as 20 months.

To be fair to Mr Prodi, it was his predecessor, Silvio Berlusconi, who changed the electoral system on the eve on the elections two years ago to allow more fragmentation of the parties and to establish a super-low threshold of less than two per cent for parliamentary representation.

Mr Berlusconi, who is leading in the opinion polls, now wants a snap election; however, President Giorgio Napolitano has called on the president of the Senate, Franco Marini, to form an interim government with the mandate to reform the electoral system. Mr Marini, a former Christian Democrat, is a member of the newly formed centre-left Democratic Party, which includes both progressive Catholics and former Communists.

Mr Napolitano wants to ensure future political stability before sending the country back to the polls, something the business sector also seems to be in favour of. Luca di Montezemolo, the head of Italy's Confindustria business association recently criticised Berlusconi's call for early elections saying "party egoism" should be put aside in favour of reform.

"Since it entered the euro, Italy has not been governed. A project, a challenge or any kind of vision for the country's future has been completely lacking," he said.

President Napolitano did the right thing to attempt to go for reform before calling an election and one hopes that Mr Marini is successful in putting together an interim government. However, we must keep in mind the fact that in order to form a new coalition he will need the support of a number of small parties which will be asked to vote themselves out of existence if the electoral law is changed, so we can expect a lot of horse trading to take place.

Irrespective of whether the electoral system is changed, an election is bound to take place in Italy soon and the choice will be between Silvio Berlusconi on the centre-right and almost certainly Walter Veltroni, leader of the Democratic Party, on the centre-left - Mr Prodi has made it clear he no longer wishes to lead the country.

The outgoing centre-left government has a reasonably good economic record over the past 20 months. The budget deficit has been reduced from 4.4 to two per cent, the public debt has been reduced and unemployment is down to a 15-year low of eight per cent.

However, Mr Prodi's government is not popular, mainly because the Prime Minister had to spend most of his time patching up differences between the various parties in his coalition, giving the impression that the government was always on the verge of collapse. Furthermore, Mr Prodi is not particularly charismatic, lacks PR skills and failed to properly market his economic record.

Does this mean that a Berlusconi comeback is inevitable? He is well ahead in the polls and it is a fact that he did govern for a whole term the last time he was in office, so he presided over political stability, which is certainly important. However, a change in the electoral law, if this does take place, could favour the centre-left, whose likely candidate for Prime Minister, Walter Veltroni, the popular mayor of Rome, is more charismatic than Mr Prodi.

Furthermore, Mr Berlusconi's economic record while in office was mediocre, and questions about his media empire, his past corruption charges, as well how his behaviour while in office often irritated his EU partners and are bound to resurface during the electoral campaign, so nothing can be taken for granted.

Coupled with the collapse of the Prodi government in Italy there has been a setback for the two parties in Germany's grand coalition, the Christian Democrats and the Social Democrats, in regional elections in Hesse and Lower Saxony. The Social Democrats are turning to the left in an attempt to stop the advance of the Left Party, which gained seats in both regional parliaments.

The grand coalition has not collapsed but has been severely dented, also in view of the right-wing populist rhetoric that emerged from the Christian Democrats in the Hesse election. Both parties seem to be determined to pick quarrels prior to next year's federal elections.

This is not good news for Europe as both Italy and Germany are leading players in the EU and Europe is badly in need of strong leadership to face its many challenges. A caretaker government in Italy, possibly followed by an interim government, and a weakened government in Berlin are certainly not the right formula for the way ahead.

With British Prime Minister Gordon Brown adopting more of a cautious approach towards Europe than his predecessor, there is no doubt in my mind that France, under President Nicolas Sarkozy, will now play a huge role in shaping Europe's future, especially so when the French EU presidency takes over on July 1.