Berlusconi on Very Shaky Political Ground
The Italian prime minister is caught between domestic opposition to his reforms and euro zone worries about Italy's debt.
October 31, 2011 - 12:01 am
Meanwhile, Democratic Party leader Pier Luigi Bersani has just labeled the so called “easy-dismissals” proposals contained in the Italian “letter of intents” to Brussels as an “unacceptable threat,” while his colleague Dario Franceschini has called into question the very feasibility of such measures.
Another extremely pressing issue that Berlusconi must face has of course to do with Italian public debt, now close to $1,933 billion USD, which equals 119% of Italy’s GDP. That is why EU President Herman Van Rompuy has recently asked for a “major effort on the part of the Italian authorities” in order to bring the sovereign debt down as much as possible. However, this seems to be at odds with Italy’s desperate need for swift economic growth: some economists are in fact skeptics about austerity measures and the most recent monthly economic outlook from Banca di Siena (founded in 1472) reads that “the heavy austerity measures are choking economic growth” and that the fears of a double-dip recession are once again en vogue.
More in general, while the gossip of alleged sexual scandals revolves heavily around the figure of Berlusconi, opposition leaders are starting to think about the possibility of early elections. According to Pierfrancesco Casini of the Union of Christian and Centre Democrats, the next week will be crucial in order to understand whether or not Italians will have to vote for a new government sooner than they expected. In case of further political chaos, early elections will probably take place in April 2012. Instead, if the present cabinet somehow manages to endure political and economic turmoil, there will be no elections at least until April 2013; but at that point Berlusconi’s third cabinet would have already accomplished its quinquennial mandate.
This grand finale, however, will depend more upon the fate of the global economy than on the outcome of domestic political issues. Actually, Silvio Berlusconi has recently appeared particularly confident of the fact that Italy is on the road to recovery. But even though the present economic situation must be read in the context of the global financial crisis and that tension in financial markets has been (at least partially) a consequence of multiple speculative attacks on sovereign debts, politicians in Brussels are still seriously concerned that Italy will bite the dust of insolvency next.
Ultimately, regardless of the fact that the ratio between national debt and GDP in Italy has been growing less than in other countries since 2008, and that the fraction of deficit/GDP is lower here (4.6%) than in other European countries such as France (7/7.1%) and Spain (9,2/9,3%), Berlusconi’s shoes, more than ever before, are walking on very shaky ground these days.