The fitness of Italy’s septuagenarian playboy Prime Minister Silvio “Bunga Bunga” Berlusconi to lead Italy was questioned by The Economist in 2001 in an article entitled ‘Why Silvio Berlusconi is unfit to Lead Italy’. Berlusconi sued The Economist over the article and lost.
Now, Berlusconi is suffering from a huge credibility crisis, as Merkel and Sarkozy’s recent press conference sniggers clearly demonstrated. What is also being demonstrated is what The Economist claimed in their article 10 years ago.
Today, it was announced during the G20 summit in France that Italy has apparently voluntarily agreed to be monitored by the International Monetary Fund. A week or so ago, it was the European Union which stated it was to monitor Italy.
This means that no less than two major bodies are now keeping an close eye on Italy mainly because they have very little confidence in Silvio Berlusconi’s leadership. More specifically, the EU and the IMF want to ensure Italy’s Prime Minister actually makes good on his promises to introduce much needed reforms to jump start Italy’s economy.
There are still fears that Italy will go the same way as Greece. If Italy defaults on its debt payments, saving the peninsula could be beyond the capabilities of the European Union’s special anti-crisis bailout fund. Indeed, the worry is that Italy’s default could bring down the whole of Europe, and may even damage the world’s economy. Enter once more The Economist, earlier this year, this time.
In June The Economist ran an article with the title Silvio Berlusconi’s Record: The man who screwed an entire country.
Just before the summer and only after being effectively ordered by Europe to introduce austerity measures to allay fears that Italy was about to end up in the same stormy waters as Greece, Berlusconi acted. In early September 2011, Berlusconi wasted no time in claiming he had saved Italy. This boast, however, turned out to be hollow. The plan did not have the desired effect.
Berlusconi was told to try again. He did, but did not try hard enough.
Rinse and repeat
Once more, European bigwigs scolded Berlusconi into putting Italy’s house in order, and austerity package number two was born. The second attempt failed to remove Italy from the hot water it found itself in and Italy’s financial markets remained very nervous, as did Europe. Europe shouted once more, and this led to Italy’s Premier presenting a “letter of Intent” to Europe in which he illustrated that Italy would introduce much needed reforms. The letter, which was cobbled together at the very last minute, did nothing to placate Italy’s stock markets and speculators had a field day. Nobody seemed to believe Berlusconi would make good on his promises. And they still do not.
After the letter was presented to the EU last week and with much brinkmanship, Italy’s markets became even more jittery and crashed spectacularly on Monday 31 October. The announcement by Greece to hold a referendum on the EU bail out proposal did not help matters.
Austerity attempt mark 3 for Italy appeared this week, and the interest which Italy pays on its huge national debt rose very close to the 7% danger zone. In an attempt to restore some confidence, the Bank of Italy issued a statement claiming that Italy could sustain debt-related interest rates as high as 8% and zero econimic growth without needing a bailout. This assertion did not seem to calm the rough waters. Italy’s financial markets continued their downward spiral once again today.
Market confidence was not restored because the hastily cobbled together austerity package number 3, neatly left out politically unpleasant but crucial measures, such as much needed employment reforms – Italy’s Labour Minister actually claimed the reforms would lead to terrorism – presumably to give Berlusconi an excuse for not carrying them out.
It gets messier
While attempting to cobble together austerity plan 3, Italy’s Prime Minister fell out with Tremonti, the nation’s Finance Minister. Then Italy’s President destroyed Berlusconi’s hopes of forcing though the third austerity package version through using a ministerial decree, as Berlusconi was told in no uncertain terms this was not appropriate. Surely Berlusconi should have known this?
As a consequence of not being able to use a decree, Berlusconi will have to use a confidence motion, number 94 or thereabouts, to transform latest austerity plan into law. Only Berlusconi’s government is falling apart. There are doubts Berlusconi’s government will survive next week’s austerity plan confidence vote. Despite all the trouble and chaos, Berlusconi has been ignoring mounting calls to step down coming from more or less everybody.
Nobody outside Italy believes Berlusconi can rescue Italy, either and would most likely love to see the back of the man who is worrying the world.
Really, rescue measures for Italy economy should have been introduced over a year ago, but Berlusconi was far too busy working out ways to pass laws to protect himself from all the court cases and sex scandals he’s still facing. Incredibly, he ignored Italy’s ills.
We Told You So
One wonders whether the title of a forthcoming article in The Economist may be along the lines of “We told you so”. And once Berlusconi finally does go (very soon everybody hopes), The Economist may well write another article with the title: Berlusconi – Italy’s Worst Prime Minister in 150 Years. Berlusconi once claimed he was the best Prime Minister Italy had had in the last 150 years, but he also said he saved Italy, if you remember.
To cap it all, Italy is supposed to have been joyfully celebrating 150 years of Italian unity this year. The celebrations appear to have been sidelined by the inactivity of Silvio Berlusconi and marred by riots in Rome.
Time to go Silvio.