Thursday, May 1, 2008

Italian voters are hoping that it will be third time lucky for Mr. Silvio Berlusconi. In fact, the Italian media magnate, one of the world's richest men, is almost always lucky. The real question is whether Mr. Berlusconi's third term as prime minister of Italy will be good for his country. Sadly, there is little reason to believe that the new prime minister is ready to put his country's interests above his own or to make the hard choices that Italy needs.

Italy continues to be the "sick man of Europe." While it is the world's seventh largest economy with gross domestic product of $2.4 trillion, it is the slowest growing of the more than two dozen advanced economies tracked by the International Monetary Fund. The IMF forecast Italian growth at 0.3 percent in 2008, considerably below the 1.4 percent average forecast for the 15 countries that use the euro — the 13th consecutive year that Italy has lagged the group as a whole. Italy has the highest national debt of any country in the euro zone, and is last in labor productivity among OECD members.

There is widespread agreement that Italy needs deep structural reform, but the political system has been too fractured and entrenched interests too powerful to permit governments to push through serious change. Instead, as occurred in Mr. Berlusconi's previous governments, tax cuts and promises of new public spending — a dangerous combination — have been the first resort when the economy flags. On the stump, Mr. Belusconi pledged more of the same.

That appears to have been enough for Italian voters, for whom consumer confidence has slipped to a four-year low. They lost patience with Prime Minister Romano Prodi, whose political style and policies were the antithesis of Mr. Berlusconi's. Mr. Prodi's prospects were not helped by his one-seat majority in the Senate and the power wielded by small parties in his noisy coalition — the election law that gave disproportionate power to small and fringe parties was another legacy of Mr. Berlusconi's previous term in office.

When his allies deserted him, Mr. Prodi called elections for Italy's 62nd postwar government three years ahead of schedule. Mr. Berlusconi was ready. Together with the Northern League and the National Alliance, Mr. Belusconi's People of Liberty party won 171 seats in the 315-seat Senate and 340 seats in the 630-seat Lower House (excluding seats for overseas districts). The main opposition party, the Democratic Party, won 116 seats in the Senate and 211 seats in the Lower House votes. Ever the showman, the new prime minister promised to hold his first Cabinet meeting in Naples, where mountains of garbage have created a crisis and threatened exports of the region's famous mozzarella cheese. He has pledged to save Alitalia, the national flagship airline, which has been hemorrhaging money at the rate of 1 million euro a day, from being sold to Air France. And he commenced his personal diplomacy by hosting Russian President Vladimir Putin in his vacation home in Sardinia just after the election.

That produced speculation that Aeroflot might help bail out the troubled air carrier, as well as reports that ENI, Italy's national energy company, and the Russian energy powerhouse Gazprom would be cooperating in developing Libyan energy supplies.

Mr. Belusconi's close ties with Mr. Putin threaten to put him at odds with other European leaders who are increasingly nervous about Russia's muscular energy diplomacy. That is likely to embolden Mr. Berlusconi, who relishes a chance to show up his rivals in Europe. His confidence will also be strengthened by the warmth that governments in Germany and France now show toward the United States: Mr. Berlusconi, a staunch ally of the U.S., can claim that they are following in his footsteps.

But the real issue remains economic reform. If he is serious, Mr. Berlusconi will be aided by his large majority in Parliament, as well as the decimation of the smaller parties that crippled Mr. Prodi's government.

The two main parties in Parliament, Mr. Berlusconi's People of Liberty and the Democratic Party, control 80 percent of its seats; the number of parties in the legislature shrank from 26 to 6.

If there is a problem looming for Mr. Berlusconi, it is the presence of the Northern League in his coalition. The party won 25 Senate seats and 60 Lower House seats, giving it substantial say in policy making. Unfortunately, the party's anti-immigrant, pro-North agenda is sometimes called racist and separatist. Keeping its leaders happy will test Mr. Berlusconi — failure to do so brought his first government down in 1994.

If history is any guide, Mr. Berlusconi will do his best to keep them happy and in the government. That may ensure his term in office, but it is not what Italy needs.

Real reform will be unpopular and painful. With his new mandate, Mr. Berlusconi has the means to lead his country into the 21st century. He is unlikely to use it.

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