The Rise and Fall of Berlusconi

 NEWSWEEK

http://www.msnbc.msn.com/id/12019244/site/newsweek/page/3/

Is Italy's flamboyant leader going down in flames?

April 3, 2006 issue - The lights were set up, the camera was ready. Italian Prime Minister Silvio Berlusconi stood in front of the Italian and European Union flags, ready for a portrait, but he stopped for a second to chat with an American reporter. "You know," he said, practicing a line he would use before a joint session of the U.S. Congress a few days later. "When I see the American flag, I don't see just a symbol of a country, I see a symbol of freedom and democracy." He smiled, satisfied. "And the European flag?" thet reporter asked. Berlusconi seemed a little taken aback. He paused and thought. "Under construction," he said.

Listening to the 69-year-old billionaire turned politician's increasingly frenzied politicking against the euro and Brussels, one might think "under destruction" would be more accurate—especially if Berlusconi manages to win his uphill bid for re-election on April 9 against former European Commission president Romano Prodi. Right now, however, that seems unlikely. Berlusconi's political machine is in meltdown. The candidate's first televised debate was a disaster. His coalition and his cabinet are out of control. Instead of tending to allies, he's battling the big business interests that ought to be his core support—all of them alarmed by Italy's seemingly unstoppable economic slide. Along with much of the rest of Europe, they hope more and more for a Prodi victory. But while many of Italy's ills can justly be laid at the door of its flamboyant prime minister, those that matter most—and most threaten the rest of Europe—will persist no matter who wins this year's closest and most important election.

It wasn't supposed to be this way, at least in Berlusconi's eye. He imagined winning a second term by sheer force of personality, thrusting himself onto the public stage to showcase his natural advantages: ebullience, charm and take-charge personal confidence. But that strategy seems to have backfired. Tense and defensive, he looks these days like he probably feels—a man whose hopes for staying a step ahead of Italy's vindictive prosecutors (by running the country) are coming to a potentially ugly end. The latest polls show him behind by 3.5 to 5 points, a gap that has lately widened rather than narrowed. The winning smile that has long been his emblem looks increasingly like a rictus. Berlusconi's last best hope is that the Socialists' famously soporific Prodi will so thoroughly bore the electorate—or the extremist fringes of Prodi's cobbled-together leftist coalition so appall it—that at the last moment Italians will throw up their hands and return to the long-running political carnival that has been Silvio's Circus.

It would be premature to count him out, of course. As the longest-serving Italian prime minister since World War II, he has brought admirable political stability to a country notorious for its lack thereof. Yet Europe wants him gone, for good reason. Partly it's his government's uncanny knack for infuriating European leaders, which at times seems almost pathological. At the height of the controversy over Muhammad cartoons earlier this year, one Berlusconi minister donned a T shirt emblazoned with a particularly insulting caricature of the prophet. (The minister resigned, but not before 14 people were killed in anti-Italian riots in Libya.) Harking back to 2003, when Berlusconi likened a German member of the European Parliament to a "kapo" in a concentration camp, a member of his cabinet just last week compared the Netherlands' legalization of euthanasia to Nazi eugenics. Even the government of Berlusconi's ally Tony Blair has been rattled by accusations that the Italian magnate involved the husband of a British cabinet member in money laundering and tax evasion, a charge both men deny

The real danger that Berlusconi's Italy poses for Europe, however, is economic. Over his tenure, Europe's fourth largest economy has become its weakest link. From an already anemic growth rate of 1.8 percent in 2001, Italy slowed to 0.0 last year. Niente! The country faces such "profound, serious problems," new Central Bank Gov. Mario Draghi said this month, that it has "run aground." And worries are growing that the country will be an increasing drag on the rest of the European Union. "There's no doubt that Italy is the sick man of Europe," says economist Tito Boeri of the prestigious Bocconi University business school in Milan.

Is Berlusconi to blame? Of course not, he trumpets, pointing an accusatory finger at the economic crunch following the terrorist attacks on the United States in September 2001, a few months after he took office. "Europe probably suffered most, after what occurred, because of its inability to adjust," Berlusconi told NEWSWEEK last month. In his version of history, restrictions on debt and the rising strength of the euro are at the heart of the problem. "Four years ago," said Berlusconi, "to buy a euro, 82 cents of a U.S. dollar were enough. Today you need $1.20. What does this mean? That any European product is more expensive by 50 percent!" Thanks to Brussels, "our companies have their hands tied, are crushed, are squeezed between the hypervaluation of the euro, the many regulations they have to comply with, and competitions from new economic systems led by China and India which, among other things, resort to unfair competition."

Berlusconi doesn't go so far as to say he'd pull out of the euro zone, if re-elected. In his interview, he put it more obliquely: "I'll try to convince my colleagues to open their eyes and change, which is not very easy." Despite Berlusconi's hot rhetoric about the euro, he knows the cold realities. When Italy had the lira, sure, Rome could devalue whenever necessary to jump-start exports. But those tactics brought on double-digit inflation, forcing families and small businesses to become currency speculators if they wanted to survive. The sense of insecurity that created is one reason earlier governments were so shaky and short-lived. The EU stability pact that underwrites the euro has been in place the whole time Berlusconi has held office—and probably helped to keep him there, if only by forcing his government to keep its spending under some semblance of control. Berlusconi recognizes as well as anyone that Italy's economic decline would probably accelerate under more-populist policies. "Deficits would go sky-high," says Antonio Missiroli, chief policy analyst at the European Policy Center in Brussels. "You could end up with a sort of Argentina-like crisis."

In fact, Italy could end up there anyway, with or without Berlusconi. The man who made billions by building a private media empire likes to present himself as the paradigm of entrepreneurship and a great friend of business. And to be fair, he has introduced new flexibility into the labor market and managed to reform the pension system further. But while he talks about the bottom line, he's really about razzle-dazzle. What sounded like bold concepts for cutting taxes and government bureaucracy when he took office in 2001 now smacks of what some call "spaghetti economics." As Italy's economy has declined, Il Cavaliere has made almost no effort to introduce the sort of serious reforms that could reverse the slide. "In his five years there were neither big privatizations nor structural reforms," says Boeri. "His idea was just to raise public expenditure and cut taxes to revitalize demand." It didn't work. Many European businessmen now worry that, eventually, Italy's economy will deteriorate to such an extent that the country could be forced out of the euro zone even if Berlusconi doesn't really want to go that route—and even if Prodi, Mr. Europe, is elected.

In a sense, Italy is the proverbial apple that poisons the barrel. Consider the situation Prodi finds himself in. Even if he wins by a substantial margin, he will have a hard time taking the economic steps he considers necessary. Reason: thanks to changes in the electoral law pushed through by Berlusconi, Italy has returned to the old system of proportional representation that created such unstable coalitions in the past. "The country will be much less governable," says John Harper at the Bologna Center of Johns Hopkins University. Yet obviously, painful decisions must be made. Italy's trade deficit for 2005 surpassed ¤10 billion, a result of both skyrocketing energy costs and rising labor expenses. European budget deficits are supposed to be held to 3 percent of GDP annually. Several countries have exceeded that, but Italy, at about 4 percent, is among the worst. And its example makes it easier for other countries to justify slipping beyond the bounds

Compare Italy's zero growth with other nations of Europe: Spain at 3.4 percent, the U.K. at 1.8 percent, France at 1.4 percent. Only by Italy's standards could such performance be considered anything but anemic. Yet at a time when Europeans need to believe in change, Berlusconi has actually helped discredit the kind of free-market reforms needed to make Italy's economy, and Europe's, more dynamic. He likes to cite the successes of Ronald Reagan in the United States and Margaret Thatcher in Britain, but he has been utterly unwilling to walk their walk. Italian economic and industrial policies are so hapless, in fact, that the country's business class is in open revolt. One of Berlusconi's most aggressive critics is Diego Della Valle, chief executive of the global clothing and shoe behemoth most famous for the Tod's brand. After Della Valle took Berlusconi to task for his failures, Berlusconi denounced him as a businessman who'd "gone out of his mind and supports the left." Nor did he stop there. Della Valle "must have many skeletons in his closet, and many things that must be pardoned," Berlusconi went on to say, seemingly oblivious to accusations that he himself has misused his office and his power in the legislature to block or defeat criminal prosecution for his own business dealings. As for Della Valle, he dismissed the prime minister as "a man on the edge of a nervous breakdown."

http://en.wikipedia.org/wiki/Romano_Prodi

Romano Prodi

Personal

Romano Prodi was born in Scandiano, in the province of Reggio Emilia (Emilia-Romagna). He is the eighth of nine children of Mario Prodi, an engineer originally from a peasant family, and Enrica, elementary teacher. He has six brothers, five of them university professors (including a Member of the European Parliament, Vittorio Prodi), and two sisters.

He married Flavia Franzoni in 1969. They have two sons, Giorgio and Antonio. He and his family still live in Bologna. Prodi is a devout Roman Catholic.^[1]

Academic career

After completing his secondary education at the Liceo Ludovico Ariosto in Reggio Emilia, Prodi graduated in law at the Sacro Cuore Catholic University of Milan in 1961 and carried out postgraduate studies at the London School of Economics and Political Science.

In 1963 he became a teaching assistant for Beniamino Andreatta in the department of economics and the faculty of Political Science of the University of Bologna, then serving as associate professor (1966) and lastly professor (1971-1999) of industrial organisation and industrial policy. Prodi has also been a visiting professor at Harvard University and the Stanford Research Institute. His research covers mainly competition regulations and the development of small and medium businesses. He is also interested in relations between states and markets and the dynamics of the different capitalistic models.

Prodi has received close to a score of honorary degrees from institutions in Italy, the rest of Europe, North America, Asia, and Africa.

] Politics

[edit] Beginnings

Prodi used to be a left-wing reformist Christian Democrat and disciple of Beniamino Andreatta, another economist turned politician. During the mid-1970s, he was appointed Minister of Industry in 1978 during Giulio Andreotti's government as technical minister; he held posts on various commissions through the 1980s and early 1990s.

On April 2, 1978, Prodi and other members of the faculty of the University of Bologna passed on a tip about a safe house where Aldo Moro, the former Prime Minister kidnapped by the Red Brigades, was detained. Bizarrely, Prodi claimed he had been given the tip by the founders of the Christian Democratic Party, contacted from beyond the grave via a séance and a Ouija board. While Prodi thought the word Gradoli referred to a town on the outskirts of Rome, it likely referred to the Roman address of a BR safehouse, located at via Gradoli 96. Later, other Italian members of the European Commission claimed that Prodi had invented this story to conceal the real source of the tip, which they believed to have originated in the Italian extraparliamentary left. [1]

Prodi served as chairman of the powerful state-owned industrial holding company IRI - from 1982 to 1989 and again from 1993 to 1994. He twice came under investigation for alleged corruption while he was head of IRI. He was accused of conflict of interest first in connection with contracts awarded to his own economic research company, and secondly over the sale of the loss making state owned food conglomerate SME to the multinational Unilever - for which he had for a time been a paid consultant; but, for both accusations, he obtained a full acquittal.

The Olive Tree

In 1995 he became Chairman of the centre-left Olive Tree coalition, and in the 1996 election defeated Silvio Berlusconi and the Pole of Freedoms, being consequently appointed as Prime Minister. His government fell in 1998 when the Communist Refoundation Party withdrew support, allowing the formation of a new government under Massimo D'Alema (many claim that D'Alema caused the collapse of Prodi in order to become Prime Minister himself). This happened by only one vote in the Chamber of Deputies in the vote of a mozione di sfiducia, an act with which either House of Parliament can withdraw its support to the Government (it has been the first and so far the only time such a vote has been called in the history of republican Italy, many Governments having fallen by dimission after the rejection of an important bill, such as the general budget of the State).

 European time

Prodi, a well-known European Union supporter, was appointed on September 1999 as the President of the European Commission, with a large support from both Christian Democrat and Social Democrat European parties. During his presidency, in 2002 eleven EU countries officially adopted the euro as their new currency, replacing a number of national currencies. Successively, in 2004 the European Union was enlarged to several Eastern Europe countries, most of them formerly part of the communist bloc. Prodi's mandate expired 18 November 2

After the end of his time at the Presidency of the European Commission, Prodi returned to Italian politics at the helm of the centre-left coalition, The Union.

In order to officially state his candidacy for the 2006 general election, Prodi agreed to participate in an apposite primary election, held on October 2005, which he won with over 70% of votes. Over four million people for the occasion went to cast a vote in the primary election. He thus led his coalition to the electoral campaign preceding the election, eventually won by a very narrow margin of 25,000 votes, and a final majority of two seats in the Senate, on April 10. Prodi's appointment was somewhat delayed, as the outgoing President of the Republic, Carlo Azeglio Ciampi, ended his mandate in May, not having enough time for the usual procedure (consultations made by the President, appointment of a Prime Minister, motion of confidence and oath of office). After the acrimonious election of Giorgio Napolitano to replace Ciampi, Prodi could proceed with his transition to government. On May 16 he was invited by Napolitano to form a government. The following day, Prodi and his cabinet were sworn in.

 In power once more

Romano Prodi and his cabinet were sworn in on 17 May 2006. Prodi's cabinet drew in politicians from across his centre-left winning coalition, in addition to Tommaso Padoa-Schioppa, an unelected former official of the European Central Bank with no partisan membership.

Romano Prodi obtained the support for his cabinet on 19 May at the Senate and on 23 May at the Chamber of Deputies. Also on May 18, Prodi laid out some sense of his new foreign policy when he pledged to withdraw Italian troops from Iraq and called the Iraq war a "grave mistake that has not solved but increased the problem of security". (Guardian)
 

 Coalition

The coalition led by Romano Prodi, thanks to the electoral law which gives the winner a sixty seat majority, can count on a good majority in House of Representatives but only on a very narrow majority in Senate. The composition of the coalition is very varied, throwing parties of Communist inspiration like "Comunisti Italiani" (Italian Communist Party) and "Rifondazione Comunista" (Communist Refoundation party) together with parties of Catholic and liberal inspiration, like "Margherita" (Daisy) and "UDEUR" (Democratic Union for Europe), led by Clemente Mastella, a former member of Christian Democratic Party. Therefore, according critics, it is difficult to have a unique policy in different key areas, such as economics and foreign politics (for instance, Italian military presence in Afghanistan).