Aug 22, 2008

World - How Berlusconi reined in Italy

In his first 100 days in office, Silvio Berlusconi may have done the impossible: to a degree unprecedented in modern Italian history, he asserted control over this seemingly ungovernable nation. The opposition parties are mired in squabbling, and Berlusconi, now prime minister for the third time since 1994, has an approval rating of 55 percent—higher than Britain's Gordon Brown, France's Nicolas Sarkozy or Spain's José Luis Rodríguez Zapatero.

That anyone in Italy has managed to be so successful is surprising. More than most Western European countries, Italy has long been bedeviled by corruption and a system that gives disproportionate political weight to small parties. Berlusconi's predecessor, Romano Prodi, was stymied by his center-left party's tiny Senate majority and the government's fractious nine-party coalition. But Berlusconi, the 72-year-old media mogul, cannily exploited a 2005 electoral law that wiped out these small parties to win a surprise landslide victory from which the opposition is still trying to recover.

His center-right party now has 174 seats in the Senate (versus the left's 132) and while he enjoys something of a honeymoon period with the electorate, he has also wasted little time in consolidating his authority. One of his first acts: pushing through a bill that gives the top four national officeholders, including the prime minister himself, immunity from prosecution while in office. The bill passed overwhelmingly last month, and put an end to outstanding criminal proceedings against Berlusconi (which he and supporters say were politically driven).

That this new law was a possible conflict of interest did not go by unnoticed, but Italians are feeling too poor to pay it much attention. After 10 years of near-zero economic growth—Bank of America predicts 0.5 percent growth this year—they are demanding security, financial and otherwise. And Berlusconi is delivering, with an iron-fist-in-velvet-glove competence. Emblematic has been his ability to clean up Naples, buried for months under trash in part because the surrounding communities simply did not trust the government to manage the landfills. Ever the showman, Berlusconi held cabinet meetings in Naples—fulfilling a campaign promise to do so until the trash was cleared—and appointed a "garbage czar" to fix the problem. In July, Parliament approved Berlusconi's plan to open new landfills and incinerators, and permit soldiers to protect temporary landfills from angry residents. Days later Berlusconi said 50,000 tons of trash had been removed.

With a similar resolve he tackled the perception that violent crime is on the rise (despite data showing otherwise), and that foreigners are to blame for it. In July, the government declared a state of emergency to fight illegal immigration and proposed a law mandating fingerprinting for all Roma living in camps in Italy. Berlusconi softened the plan in the face of opposition from human-rights groups and the European Union. But in early August, he deployed thousands of troops throughout Italy in a bid to crack down on immigration and petty crime.

Such tough tactics could give Berlusconi the cover to tackle some of Italy's deeper issues. Italians now pay some of the highest taxes in Western Europe, at 43 percent, and have some of the lowest salaries—leading to widespread tax evasion. Public debt remains at more than 100 percent of GDP; servicing it costs Italy 5 percent to 6 percent of GDP annually, says Bank of America's Gilles Moec. Berlusconi has pledged to reduce spending (in contrast to his first term), but doing so will make it harder to fulfill a pledge to cut taxes or to stimulate growth. Yet Berlusconi must figure out a way. Italians like him now, but what they really want is economic stability. Cleaning up trash and harassing immigrants won't be enough.

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