Convict Berlusconi’s Italy Ultimatum: Save Me or Burn

Convicted criminal Silvio Berlusconi has sent an ultimatum to Italy: save me or Italy will burn. If you have been following the news, you will know Italian politics is in turmoil and the government is on the brink of collapse – as is Italy’s economy.

Today, Monday, the Bund Italian bond spread is up to 288 points, Milan’s, effectively, Italy’s stock market is down with Berlusconi’s own companies taking a hit, as are Italy’s major banks. The Berlusconi effect.

Berlusconi knows full well Italy is in an economic mess and he knows that bringing down Italy’s government now is likely to cause Italy major problems. But Italy’s former prime minister does not care about the damage he’s doing to Italy, for him, Italy’s weakness is merely something he can exploit to his own personal advantage to put an end to his legal woes. Berlusconi is more than happy to use his full and considerable might to bring as much pressure as he can to bear on Italy’s leaders. The person fixed firmly in his sights is the nation’s president: Giorgio Napolitano.

What Berlusconi is fishing for is some form of amnesty or friendly law to help prevent his conviction for tax fraud from sticking and, moreover, to prevent him being stripped of his senate seat. The stripping a process has already been set in motion and a vote this Friday will determine whether or not Berlusconi should be allowed to keep his senate seat, though the final vote by the whole of Italy’s senate won’t take place until mid-October, if the government manages to survive that long.

Berlusconi also fears that if he loses the immunity from arrest his senate seat grants him, he may well be arrested.

By exerting as much pressure has he possibly can, first by threatening the resignation of all his PdL party members from Italy’s parliament, and then, after realising that this threat would not have the desired effect, by ordering his ministers to resign, supposedly over a forthcoming VAT rise, Berlusconi is causing untold chaos.

The excuse given for the resignation of Berlusconi party ministers of a protest against an imminent VAT rise is not fooling anyone though. What Berlusconi is trying to do is to save himself, nothing more, nothing less.

Even if Berlusconi’s ministers have agreed carry out their master’s orders (which they have now done – the resignations are now irrevocable), at least one is having misgivings. Others appear to be wavering. Is the wavering a mere charade? Maybe. What is very clear is that Italy’s government seems to be days, if not moments, away from total collapse.

Berlusconi says he wants elections to be called as soon as possible, but moves are afoot to see whether the government can be saved to avoid elections, at least for the moment.

What may save the government from complete collapse is the defection of some of Berlusconi’s ministers. It is rumoured that members of Berlusconi’s PdL party may dump Berlusconi and split off to form a separate parliamentary group. This may save the government from falling. Even if this happens though, elections look likely sooner rather than later, as the always fragile relationship between the main coalition partners – Berlusconi’s PdL and the PD – ends in tatters.

Another goal for Berlusconi is to play for time so he can hold onto his seat in Italy’s parliament long enough to wait for his appeal to Europe’s court of human rights over his tax fraud case treatment to be heard. This won’t take less than a year or so, and Italy cannot afford to wait for Berlusconi, but by bringing down the government, Berlusconi will give himself more breathing space, at Italy’s expense. It is likely Berlusconi is hoping Italy’s president Napolitano will ask parliament to delay the vote on the stripping of his senate seat in which case the direct attempt to sink the current government may end, even if Berlusconi’s recent moves have all but destroyed it. Behind the scenes moves are probably being made to find some way to save (or eliminate?) Berlusconi and, it is hoped, save Italy.

Will Berlusconi get his way?

It’s hard to say. Just how dangerous and embarrassing Berlusconi is for Italy has become evident after recent events, so removing him conclusively would potentially restore some vestige of political stability to Italy. Whether Italy’s government can keep itself afloat long enough to achieve Berlusconi’s removal is unclear, as is exactly how he can be removed. In the meantime, Berlusconi will keep piling the pressure on in the hope he’ll be offered an escape route.

Acquiescing to Berlusconi’s demands and delaying the process of removing him from Italy’s senate would only prove to be a short term solution – the Berlusconi threat would remain and he has other court cases pending too. The gravity of this threat to Italy’s stability must now be crystal clear to Italy’s leaders who appear to have completely underestimated Berlusconi’s ability and willingness to cause trouble. Both Italy’s current premier and the nation’s president made the major mistake of taking Berlusconi at his word when he repeatedly assured everyone he would not topple the government.

The Consequences of Collapse

If Italy’s government does collapse, the IMF or Europe, or both, may intervene and impose draconian measures on Italy in order to bring the nation’s huge level of public debt under control. Berlusconi will be fully aware of this possibility and is using the worries this will occur as an additional lever. Another risk is that Berlusconi’s shenanigans will cause Italy’s fragile recovery to end overnight. Business associations and bankers are ringing alarm bells as fears mount that Italy’s already very poorly economy may end up in a downward spiral.

For now, though, it looks as if Italy is incapable of fighting off the Berlusconi threat. How has Italy ended up being blackmailed by a convicted tax evader? Who knows.

Way back in 1994 late Italian journalist Indro Montanelli predicted that “Berlusconi’s Italy will end badly, very badly, in shame and corruption.” It seems Montanelli’s prediction was exceptionally perceptive.

If Italy were an egg, it would be teetering on the edge of an abyss and Berlusconi would be the wind which is blowing ever harder. This wind will blow the egg into the abyss, even if it means the source of the wind risks following the egg. In other words, if Italy goes down, it may well take Berlusconi with it. Ever the gambler, Berlusconi is not letting this worry him.

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Featured image by Fir0002

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