Both Italy’s outgoing Prime Minister Silvio Berlusconi and challenger Romano Prodi have claimed victory in the country’s general election. Prodi’s center-left coalition seems to have just won a majority in the powerhouse of Parliament while Berlusconi’s center-right coalition has scraped by with a majority in the upper house.
In maneuverings reminiscent of President Bush’s crucial win in Florida which gave him his first term in the White House, the Berlusconi camp is demanding recounts and questioning why half a million ballot papers were declared invalid. With just point one of a percentage point between the rival political groupings, it seems clear that even if one or the other manages eventually to form a government, it will be virtually impossible for the administration to function if the opposition chooses to obstruct it.
Pundits from both sides are talking of a grand coalition government for maybe a year until fresh elections can be held. Given that all parties will be seeking to outmaneuver each other in advance of the renewed contest, such a coalition will be doomed. It looks as if Italian politics has returned to the comedy of uncertainties that dominated Rome from 1945 until Berlusconi’s emphatic win five years ago.
The charismatic if erratic media billionaire did indeed break the mold of Italy’s revolving-door governments but the high hopes his election engendered have been almost completely unfilled. Despite his own record as a thriving businessman, Berlusconi’s management of the Italian economy itself has been a disaster with parlous growth. In the modern mold of politics, he has been long on presentation and desperately short on results. The Milan stock exchange dropped when it became clear voters had made no definite choice. This may seem odd. Italy’s undoubted postwar economic success was achieved, principally in Lombardy, in the north of the country, despite the constant political instability. Indeed, business actually exploited the political and administrative chaos to make an extremely good living. Perhaps after five years of Berlusconi, they have forgotten their old ways.
The reaction of investors may however be informed by a wider appreciation that Italy’s economic power is diminishing thanks to factors beyond its control. Terms of trade are turning against it. Important sectors such as footwear and textiles are being challenged by the likes of China and Vietnam. Brussels has been half-hearted in its protectionist moves here and there is an acceptance that quotas cannot be maintained indefinitely. Perhaps more serious, the network of engineering and manufacturing companies around Milan, many of them family-owned and all working together, is now struggling to compete on price. Even some of the great names of Italian manufacturing such as Fiat have become a shadow of their former industrial selves. These fundamental economic uncertainties have clearly been reflected by the electorate. Voters must now brace themselves to be asked again to choose a government with a working majority. The only question is when.
