Basta, Berlusconi

Our verdict against Mr Berlusconi in 2001 rested on two broad
considerations. The first was the glaring conflict of interest created by his
ownership, via his biggest company, Mediaset, of the three main private
television stations in Italy. The second was the morass of legal cases and
investigations against him and his associates for a wide variety of alleged
offences, ranging from money-laundering and dealing with the Mafia to false
accounting and the bribing of judges. We concluded that no businessman with such
a background was fit to lead one of the world’s richest democracies.

That view stands: we continue to think that Mr Berlusconi is unfit to be
prime minister, both because of the conflict of interest arising from his media
assets and because of his continuing legal travails (he may shortly go on trial
yet again for alleged bribery, this time of a British witness, David Mills, who
happens to be married to a minister in Tony Blair’s cabinet, Tessa Jowell). But
five years on we have a new and even more devastating reason to call for Mr
Berlusconi’s removal from office: his record in power.

As we predicted in 2001, his premiership has been disfigured by repeated
attempts, including an avalanche of new laws, to help him avoid conviction in
legal trials. He has devoted much time not only to changing the law to benefit
himself and his friends, but also to besmirching Italy’s prosecutors and judges,
undermining the credibility of the country’s entire judicial system. It is not
surprising that tax evasion, illegal building and corruption all seem to have
increased over the past  five years. And, again as we predicted, he has done
little to resolve his conflicts of interest: instead, he has shamelessly
exploited the government’s control of the state-owned RAI television network.
Directly or indirectly, Mr Berlusconi now wields influence over some 90% of
Italy’s broadcast media, a situation that no serious democracy should
tolerate.

Italian voters knew most of this in 2001, of course. Yet they still chose
to give Mr Berlusconi their backing, for quite another reason. They hoped that
he would deploy the business skills that had helped to make him so rich to
reform their weak economy, making all Italians richer as well.

On this count, however, Mr Berlusconi’s government must be judged an abject
failure (see page 27-29). Italy now has the slowest-growing large economy in
Europe. With wages still rising even though productivity is not, and with
currency devaluation no longer possible now that Italy is in the euro, Italian
business is fast losing competitiveness. Many of the country’s traditional
producers in such industries as textiles, shoes and white goods are under
devastating attack from lower-cost Chinese competitors. The Berlusconi
government has also undone much of the improvement to the public finances made
by its predecessor: the budget deficit and the public debt, the world’s
third-biggest, are both rising once more.

It would be unfair to assert that Italy’s economic difficulties are all Mr
Berlusconi’s fault. In truth, its problems are similar to most of Europe’s,
although they seem worse in Italy than anywhere else. As in France and Germany,
their roots stretch back for decades, not years. To cure them will require the
adoption of many tough reforms; and, as France has just demonstrated so
graphically, implementing such changes is politically challenging, to say the
least. But where the Berlusconi government has really let Italy down is in
failing even to begin the process. Apart from a few sensible labour-market and
pension reforms, it has done too little to press ahead with market
liberalisation, with more privatisation and with the promotion of competition in
what is one of Europe’s most overregulated economies. The conclusion from these
five years is that Mr Berlusconi is not and never will be a bold economic
reformer

of the kind that Italy desperately needs.

Prodi’s test
Unfortunately there are reasons to doubt whether his centreleft opponent,
Romano Prodi, would be a lot better. The former economics professor grasps the
need for change in Italy more clearly than Mr Berlusconi, who has spent much of
the campaign denying that the country has any economic problems at all.
Moreover, Mr Prodi made a fair stab at initiating reforms when he was prime
minister in 1996-98_and he also succeeded in getting the country into the euro.
But neither then nor in his later stint as president of the European Commission
did he show himself to be a forceful leader, still less an unwavering advocate
of economic liberalism. Most worrying of all, if Mr Prodi wins the election he
seems certain to be dependent on the support of coalition partners who are
actively hostile to reform, particularly the unreformed Communists who are led
by Fausto Bertinotti.

In foreign policy, too, some of Mr Prodi’s instincts may be unwelcome. He
is a faithful believer in a European federal superstate; Mr Berlusconi’s more
sceptical approach to Brussels is one of his better points. Mr Prodi’s plans to
withdraw Italian troops from Iraq are no longer controversial_indeed, there is
little difference between him and Mr Berlusconi on this issue_but he is likely
in general to adopt a rather less friendly attitude to America than his
rival.

It is the economy that will remain the critical test. Sadly, most Italian
people do not yet recognise how sick their economy has become. For that reason
they may not be ready for the pain of reform. Mr Berlusconi is certainly not
going to push them_and he remains unfit for the once in any event. Italians
should accordingly vote for Mr Prodi, not il Cavaliere.