End of the Berlusconi era

Silvio Berlusconi’s decision to resign as Prime Minister was perhaps inevitable as the one-time great survivor succumbed to the political and financial turmoil engulfing Italy.

Berlusconi man­aged to survive repeated gaffes and outrageous comments- Anthony Manduca

Berlusconi made his resignation announcement after he won a Budget vote in Parliament last Tuesday with 308 votes – eight less than the 316 votes needed for an overall majority – and 321 abstentions.

Berlusconi’s fate was probably already sealed prior to the vote when Northern League leader Umberto Bossi, his long time ally and coalition partner, called on him to resign and to be replaced by former Justice Minister Angelino Alfano, the Prime Minister’s chosen successor.

As MPs voted, they were no doubt influenced by the fact that Italy’s borrowing costs had reached unsustainable high levels. The country’s sluggish economic growth over the past decade has caused concern in the markets about its ability to repay its debt, hence the increased borrowing costs.

Italy is the eurozone’s third largest economy, represents 17 per cent of the bloc’s GDP and has debts of around €1.9 trillion. Unlike Greece, Portugal and Ireland, it is considered too big to be bailed out by Europe, and a default by Rome could break up the eurozone.

Berlusconi actually lost his absolute parliamentary majority in August 2010 when 33 rebels from his People of Liberty party formed a breakaway Future and Freedom for Italy party under the leadership of Gianfranco Fini, Parliament’s Speaker and one-time close ally of the Prime Minister.

The Italian government did not collapse since then because whenever its survival was threatened, Fini’s rebels abstained or supported the government in a parliamentary vote.

In Tuesday’s vote, however, eight MPs from Berlusconi’s own People of Liberty party joined the opposition in abstaining, something which is said to have shocked him, prompting him to tell La Stampa newspaper that he felt “betrayed”.

Public opinion has also very much turned against Berlusconi, who enjoys an approval rating of only 22 per cent. Earlier this year, Italian voters in local elections delivered a massive blow against Berlusconi and his ruling People of Liberty party, which saw the opposition centre-left Democratic Party take control of Milan and Naples, traditionally Berlusconi strongholds.

Berlusconi has dominated Italian politics since the early 1990s when he formed his own centre-right political party, Forza Italia, as the natural successor to the Christian Democratic party, which collapsed as a result of the ‘Mani Pulite’ (clean hands) corruption investigations.

Most former Christian Democrats joined Berlusconi’s new movement, although some felt more comfortable joining the centre-left, like Romano Prodi, while others preferred to remain in the political centre and maintain their identity, such as Pier Ferdinando Casini, who formed the Union of Christian and Centre Democrats (UDC).

Berlusconi won three elections, in 1994, 2001 and 2008, while he lost in 1996 and 2006. His business background, dynamism, fresh ideas, ‘outsider’ image and immense charisma made him popular with Italians, who saw in him an opportunity to better their lives and get things done in a more efficient and business-like way.

Berlusconi managed to survive repeated gaffes, outrageous comments, battles with the judiciary, sex allegations as well as at least 23 judicial investigations, mostly for corruption and tax evasion, but also one for allegedly paying for sex with an underage prostitute.

Until recently, Italians tolerated Berlusconi for his alleged personal flaws – some even admired him for them. However, over time, as the economic and financial situation worsened and Berlusconi seemed more preoccupied with defending himself from the various accusations against him – instead of concentrating on the economy – the public increasingly lost patience with him. Many traditional Catholics were also dismayed at allegations of Berlusconi’s private life.

Berlusconi did bring about political stability during much of his time in office, but his greatest failure over the years was not introducing enough economic reform to get the Italian economy moving again, despite governing with a comfortable parliamentary majority.

Since the eurozone turmoil hit Italy in July, the government has had to introduce two sets of austerity packages, Standard and Poor’s downgraded Italian debt, and at last week’s G20 summit Italy agreed to an embarrassing special oversight from the IMF and the EU of its efforts to implement economic reforms.

Berlusconi has now said he will resign as soon as Parliament approves fresh austerity measures demanded by the EU. He also made it clear that he will not run for office at the next election.

Although Berlusconi would like Parliament to be dissolved and fresh elections called, such a decision is the prerogative of President Giorgio Napolitano.

Most observers believe Napolitano will ask former European Competition Commissioner Mario Monti – a highly respected economist – to head a new government. Monti, a technocrat, was last Wednesday appointed a life senator by Italy’s head of state, and should he become Prime Minister it would send out the right signals to the markets.

Other possible candidates are Gianni Letta, Berlusconi’s chief of staff – who may be associated with the policy failures of the outgoing government, Renato Schifani, the President of the Senate, who is a member of Berlusconi’s party, Justice Minister Angelino Alfano – architect of the law that protected Berlusconi from criminal prosecution (before it was overturned in 2009), and former centre-left Prime Minister Giuliano Amato – who probably lacks enough support in Parliament.