Berlusconi to Resign? Be Careful What You Wish For

The besieged prime minister could leave Rome in turmoil if he leaves Italian politics.

Speculation abounds that Italian prime minister Silvio Berlusconi may be forced to resign as his parliamentary majority has apparently dissipated and Italy is on the verge of becoming the fourth nation that is consumed by Europe’s spiraling sovereign debt crisis. The political paralysis of Berlusconi’s coalition may well be carried over into the next administration however.

If Berlusconi were to step down, a caretaker government could be appointed to implement necessary austerity measures before parliamentary elections take place. Regular elections are next due in 2013 but the besieged prime minister seems unlikely to last for another two years. A budget vote on Tuesday could seal his fate. If his coalition falls apart as expected, next week’s confidence vote could terminate Berlusconi’s premiership.

Potential leaders for a caretaker government include Giulio Tremonti, the finance minister, and Mario Monti, a former European internal market and competition commissioner. Both are conservatives and respected across the political spectrum.

A little more than half of the Italian people favor a caretaker government replacing Berlusconi’s according to a recent opinion poll. Their experience with technocratic governments in the 1990s was fairly positive.

Italy’s public debt peaked at nearly 122 percent of gross domestic product in 1994 before the country’s postwar party system was broken up and media tycoon Berlusconi elected prime minister for the first time. He was quickly forced to resign when the separatist Lega Nord, his coalition partner up to this very day, withdrew support and a caretaker government took over which slashed spending and reduced the nation’s debt burden during a two year reign.

Another technocratic government would require bipartisan support. Lawmakers in the Lega Nord have already announced that they will not endorse one and the left-wing opposition is scattered. Berlusconi’s popularity may have plummeted and his populist party is likely to fracture if he leaves the political arena; the social democrats aren’t very popular either. Party secretary Pier Luigi Bersani, who served in Prime Minister Romano Prodi’s cabinets in the 1990s and between 2006 and 2008, is a former communist who will struggle to appeal to moderate voters. He has also to cope with division among his own ranks where far leftists, social democrats and Third Way centrist compete for primacy.

A left-wing government, moreover, would need support from an array of smaller parties as the social democrats are unlikely to ever command a majority.

Whatever cabinet succeeds Berlusconi’s, if he resigns, it will be hard pressed to garner popular support for the sort of thorough economic reforms that are needed to boost Italy’s competitiveness within the eurozone.

Cronyism, corruption and rigid labor laws constitute major impediments to growth. The Italian judiciary is more political than is the case in most of the rest of Europe, forcing companies to often settle out of court while the prevalence of bribery and organized crime perpetuates a traditional imbalance between the industrialized north and the largely agricultural south of the country.

Especially in the south, a high amount of economic activity is confined to the informal sector. It will necessitate a huge shift in Italian political culture to change this system. A caretaker government, appointed by parliament instead of the people, may lack the credibility to accomplish it.