The Italian Government is facing a final act of a political drama that has kept Italy stalled. The Premier, Mr. Berlusconi, has finally accepted that his Government does not have a majority in the Chamber of Deputies and has announced that he will resign after the approval of the emergency economic measures, indicated as a priority by the central EU bank, and currently examined by the Senate. The dramatically escalating economic crisis has confirmed long standing problems of the Italian economy: the consolidated debt, which is running at 120% of GDP, the stagnant economy, with growth close to zero, the growing imbalances between the North and the South of Italy, the new wealth and the increasing poverty and the ever-growing tax evasion. The EU has asked Italy to start addressing the key economic problems or face disaster, with repercussions for all of the EU and the global economy. With political and social consequences that, on the other side of the Adriatic, Greece is confronting: a starkly reminder of the peril ahead, should Italy continue to deny the gravity of the situation, the urgency of corrective actions or simply continue to underestimate the long-term consequences of this crisis. Mr. Berlusconi's Government has greatly underestimated the consequences on the real economy, has lost a leading role in the EU with dramatic repercussions on regulations affecting the financial sectors. One example is the recapitalization of the banking industry which penalises growth and borrowing that Italy desperately needs. Events, however, took an unexpected turn with the passage of a formal and vital piece of legislation.
The "balance sheet" of Italy, a parliamentary bill essential to close the 2010 accounts and proceed with the new budget measures, which opened a crisis a few weeks ago, was the battlefield that saw the centre-right fall at 308, eight votes short of the necessary majority. Defections from the PDL, Berlusconi's political party, and disaffection from elected MP's from the south of Italy, were the ingredients of the latest developments.
The opposition, united, did not take part in the vote because it recognised the necessity to show clearly that the Government did not have a majority without compromising the approval of the accounts. Both objectives were achieved. Is this the end of Mr. Berlusconi?
The more likely scenario is an early election. A united emergency Government could not happen without the support of Berlusconi's PDL and it seems that the new secretary, Angelino Alfano, does not have the political strength to convince Berlusconi that a large coalition Government can achieve the reforms needed to change Italy's political and economical future.
A new credible leadership can only be achieved with a change of Government, as a consequence of an early election, or with a transition Government headed by a national political figure or by a centre-right leader that finds the strength to free itself from the Berlusconi's legacy.
Italy needs credibility, for the Government issued bonds, but also it needs recognition for the strong manufacturing sector and its export capacity, for the quality of its industrial base, together with Italy's private saving.
The Italian Government is not credible today. A credible leadership is clear on reforms and policies but also places national interest before the self-interest of its leaders.
Once Mr. Berlusconi resigns, the President of the Republic, Giorgio Napolitano, will hold formal talks to find a solution. What Italy needs is a short lived transition Government to do what no majority can currently achieve. What Italy will get, however, most likely, will be an early election.
Mr. Berlusconi has also announced that he will not stand again. We should not believe for one second that he is abandoning ship.
If the opposition does not stand together, with a single program and a strong leader, the only opinion poll that counts, the general election, can in fact result in disaster with another minority Government. Mr. Berlusconi knows it and that's the last card he is going to play.
Italy needs a political system with the ability to demonstrate to voters, allies, EU countries and the world that it is still capable to express a Government which reflects the hopes, dreams and aspirations of its people.
The "balance sheet" of Italy, a parliamentary bill essential to close the 2010 accounts and proceed with the new budget measures, which opened a crisis a few weeks ago, was the battlefield that saw the centre-right fall at 308, eight votes short of the necessary majority. Defections from the PDL, Berlusconi's political party, and disaffection from elected MP's from the south of Italy, were the ingredients of the latest developments.
The opposition, united, did not take part in the vote because it recognised the necessity to show clearly that the Government did not have a majority without compromising the approval of the accounts. Both objectives were achieved. Is this the end of Mr. Berlusconi?
The more likely scenario is an early election. A united emergency Government could not happen without the support of Berlusconi's PDL and it seems that the new secretary, Angelino Alfano, does not have the political strength to convince Berlusconi that a large coalition Government can achieve the reforms needed to change Italy's political and economical future.
A new credible leadership can only be achieved with a change of Government, as a consequence of an early election, or with a transition Government headed by a national political figure or by a centre-right leader that finds the strength to free itself from the Berlusconi's legacy.
Italy needs credibility, for the Government issued bonds, but also it needs recognition for the strong manufacturing sector and its export capacity, for the quality of its industrial base, together with Italy's private saving.
The Italian Government is not credible today. A credible leadership is clear on reforms and policies but also places national interest before the self-interest of its leaders.
Once Mr. Berlusconi resigns, the President of the Republic, Giorgio Napolitano, will hold formal talks to find a solution. What Italy needs is a short lived transition Government to do what no majority can currently achieve. What Italy will get, however, most likely, will be an early election.
Mr. Berlusconi has also announced that he will not stand again. We should not believe for one second that he is abandoning ship.
If the opposition does not stand together, with a single program and a strong leader, the only opinion poll that counts, the general election, can in fact result in disaster with another minority Government. Mr. Berlusconi knows it and that's the last card he is going to play.
Italy needs a political system with the ability to demonstrate to voters, allies, EU countries and the world that it is still capable to express a Government which reflects the hopes, dreams and aspirations of its people.
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