Article added on November 2, 2012 at 02:21 Italian time
Not only corrupt and
Heading the Italian government
since November 2011, the former European Commissioner Mario Monti has
brought a fresh wind into Italian politics. However, Italy's reform problems
The labor market reform of April 2012 was far from convincing. Incompetent
labor organizations and other groups of interest limited its scope. The government compromised
too early. The result is a labor reform with limited effects.
unemployment rate was 10.8% in September 2012. The really worrying number
however is the youth unemployment rate of around 35%. One in three young
people is without work, which is more than just a social time bomb. In the
long run, this undermines Italy's competitiveness. Furthermore, the youth
unemployment costs Italy currently €32.6 billion a year, the highest amount in
absolute terms in the entire European Union.
Italy needs a system of hire
and fire to bring flexibility back to Italy's stagnant economy. The young, often qualified people
have to be brought into the workforce. Democracy will only remain widely
accepted if the entire population gets the chance to make a decent living.
In 2012, the government is expecting a 2.4% contraction of the economy. To
get out of the recession, lower, not higher taxes are needed. But people
will actually have to pay what they owe the state.
In several Italian regions, scandals have tainted most parties. Former Prime
Minister Berlusconi's colleagues of the People of Freedom party (PdL) have
been particularly greedy and corrupt. The region of Sicily could only avoid
a default thanks to €400 million offered by the central government in
exchange for early elections. The regional president, Raffaele Lombardo (Movimento
per le Autonomie, a Lega Nord and Berlusconi ally), was forces to step down.
In Lombardy with its capital Milan, Roberto Formigoni (PdL) as well as 13
out of 80 regional members of parliament are under investigation for corruption
and other irregularities. His colleague Domenico Zambetti (PdL) has been accused of buying votes from the 'Ndrangheta
and of being corrupt in connection with public building contracts. The list
of corrupt and incompetent politicians in various regions is long. Under
Prime Minister Mario Monti, Italy's political machine aka system of clientelism
has come under scrutiny.
Italy's political system is broken. People have lost faith in virtually all
parties. In the Sicilian regional elections of October 28, 2012 the populist
Five-Star-Movement (Movimento 5 Stelle, M5S) of comedian Beppe Grillo garnered almost
15% of the vote. In absolute terms, the Five-Star-Movement won 285,000 votes
in Sicily, ahead of
the center-left PD with 257,000, the PDL with 247,000 and the UDC with
208,000 votes. However, the non-voters have become the leading “party” in
Sicily, whereas Berlusconi's People of Freedom party and his allies totally
The M5S protest party is even stronger in other regions of Italy. In next
year's parliamentary election, the protest movement is currently expected to
win up to 25% of the vote.
It is too easy to blame just politicians in Italy. In addition to the tax
evasion and organized crime problems, the Italian citizens are responsible
for many other clever ideas such as people profiting from pensions of
deceased relatives and falsely claiming disability insurance money. The
government and the administration are trying to tackle those problems more
seriously under Prime Minister Monti than before, but a lot remains to be
done. In September 2012, Morgan Stanley estimated Italy's shadow economy to
amount to up to over 20% of GDP. The
'Ndrangheta, the Mafia-type organization of Calabria, which
largely controls Europe's cocaine trade, is estimated to make some €40
billion a year. Prime Minister Monti's challenges are monumental.
Silvio Berlusconi: a return from the (politically) dead?
At a press conference held in Rome on October
27, 2012 the former Italian Prime Minister Silvio Berlusconi confirmed his
intention not present himself at the next elections as his party's candidate
for prime minister. He said that this was in order to facilitate the union
of all moderate forces in Italy. At the same time, Berlusconi vowed to
remain the president of his political movement, a mixed message for Angelino
Alfano, who is actually the Secretary of the People of Freedom party.
Subsequently, Berlusconi went on a rhetorical rampage, attacking Prime Minister Monti, whom he
had lauded just a few days earlier, and then accusing former French
President Sarkozy, German Chancellor Merkel and the German banks of plotting
against him. Furthermore, Berlusconi attacked potential moderate allies.
The reason for Berlusconi's outburst and change of mind - not to comment on
current politics - came after an Italian court ruling. A Milan court
sentenced the former prime minister to four years in jail for tax fraud in
connection with the purchase of broadcasting rights by his Mediaset
television company. Berlusconi will of course appeal the ruling. He is
unlikely to save any time in prison. The conviction could definitively end any hope for a political comeback.
The Milan court pardoned three years of the prison sentence, but barred
Berlusconi from public office for five years.
At the October 27 press conference, Silvio Berlusconi said that he had kept
quiet and not given any interviews to Italian media and not commented on the
new prime minister's work for a year. He had been in support of the new government
made up of technocrats.
The great Silvio said in his recent press conference that German Chancellor Merkel and
then French President Sarkozy, smiling at each other
at a press conference at his expense, had tried to undermine his
credibility. Furthermore, he accused German banks of selling Italian public
debt titles, implying that all of this was a plot to bring him down.
Berlusconi said that the Italian Constitutional Court is composed of eleven
left-wing and only four center-right judges. According to the former prime
minister, this is the result of three
left-leaning presidents appointing friends of the left to the Constitutional
Court. In addition to a reform of the justice system, Berlusconi demanded
institutional reforms. According to him, the small parties in parliament only think of their own interests
not of the interests of Italy, which makes Italy a country that cannot be
Berlusconi mentioned a few points that are open to discussion. According to
the former prime minister, the government of technocrats has taken measures that have deepened the
economic crisis in Italy. Higher taxes, including a higher VAT, have sent
the country into a recession.
Furthermore, Berlusconi criticized scare tactics by the Italian tax fraud
police (Guardia di Finanza). The former prime minister was right to mention
that ever higher taxes cannot be the solution to Italy's public debt
problem. He went as far as to claim that Italy suffers from the world's
highest tax burden. Taxes are indeed to high, but because tax evasion is a
Berlusconi said that Japan has a public debt of 200%, but pays a much lower
interest rate. He insinuated of course that the public debt debate was a
false one. In reality, the example was ill chosen. Over 90% of Japanese bonds
are held by the Japanese themselves. Bonds are largely issued to finance the budget.
In short, the Japanese buy bonds issued by their government, which is
unlikely to ever pay it back without a relative high rate of inflation,
accepting a ridiculously low rate of interest. As long as the Japanese are
ready to finance their government's voodoo policies, this Ponzi scheme will
continue. The day the Japanese seriously start to worry about their
government being able to pay back its debt, Japan will falter.
Berlusconi presented himself again as the world's most prosecuted citizen.
There are surely many left-wing judges just too happy to go after him. At
the same time, he has been convicted more than once in the first instance,
winning the appeals, sometimes escaping punishment only be successfully
pleading the statute of limitations.
Regarding the case of the underage prostitute Ruby, Berlusconi claimed that
he had not exerted any pressure on state officials. He said that he did not
encourage prostitution. On the contrary, Berlusconi said that he gave Ruby
money to become a partner in a beauty parlor.
The former prime minister went on to ask potential political allies such as
the Christian Democrat Pier Ferdinando Casini and Ferrari Chairman Luca
Cordero di Montezemolo to be part of a united center-right, the only way to
beat the left in the 2013 parliamentary election.
As for Prime Minister Mario Monti, Berlusconi said that he could be part of
the next government if he presented himself as a candidate. Berlusconi
rightly said that the current situation with a government of technocrats had
to end. He forgot to mention that it was him who had ruined Italy's
international reputation. A cabinet of technocrats became necessary to save
Italy from a looming default. It was not the German Chancellor Merkel who
had imposed her will on Italy, it was Berlusconi who had run down Italy to
the point that it needed a government of technocrats.
Silvio Berlusconi surely addressed some reform problems. However, since he has
been Italy's major political force since 1994, he should keep quiet the
rest of his remaining days on planet Earth and maybe dedicate himself to
Fundamental reforms are still
desperately needed in Italy.
The likes of Silvio Berlusconi should be barred from politics by the Italian
voters. Only a decade of government by serious people such as Mario Monti
will be sufficient to bring the country back to a sustainable path. First
steps have been taken. Much more still needs to be done.
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