Italy: Berlusconi's Political Capital Goes into the Red

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The man who according to Forbes magazine is the 25th richest person in the world seems to be having a few problems lately.

Although his personal income last year was a mere € 13 million, he's just sold off a cool € 2 billion of shares in his major holding company. But is this man really in big trouble and what is he going to do with all this money?

When the man in question is Silvio Berlusconi - not only the richest man in Italy but prime minister as well - you know something fishy is going on. The same day as he made this 'business' decision, as prime minister he made a 'political' decision to sell off state television and the post office, as well as other major public assets. Only time will tell whether the two are connected - but these kinds of shenanigans are just one of the reasons why voters decisively rejected his centre-right coalition at local elections last month.

In a strongly proportional system like Italy's, one or two percentage points can win or lose elections. Yet votes for his Forza Italia party fell from 29.1 percent at the 2001 general election, to just 18.8 percent today. Overall 2 million votes moved from the centre-right parties to the centre-left coalition. All this occurred in spite of his very real control of the media - the fact that voters rejected his propaganda so decisively is yet another example that people can see through media lies.

Not even Berlusconi newscasters can hide the fact that industrial production declined by 3.2 percent last year - car sales at the once mighty Fiat were down 17 percent. All the major international economic agencies have repeatedly stressed that the economy is in deep recession. Production of consumer goods is down 5.3 percent - people have either been made redundant or simply don't have money to spend.

The EU is now on his case too. The fanatical free marketeer Berlusconi has generated the highest public sector debt in Europe, going against all the EU's neo-liberal diktats. Bosses too have had enough. Soon after the election results came through the leader of the Italian CBI, Luca Di Montezemolo, called for early national elections. All of this has led to smaller coalition parties jumping ship and leaving the government - perhaps hoping to migrate to the centre-left coalition. It looks unlikely that Berlusconi can continue for the 12 months left on his mandate.

The results for the left in the local elections were mixed. Former prime minister Romano Prodi confirmed his position as leader of the centre-left coalition. Rifondazione Comunista didn't do as well as expected, although this was balanced by the election of Nicki Vendola as governor of the Puglia region, traditionally a staunch centre-right stronghold. The Greens and a small orthodox communist party scored better than expected, however.

The war in Iraq continues to create problems for Berlusconi. Last month he announced he was going to pull the troops out, only to deny it the following day - the fact that 500,000 people had demonstrated against the war just a few weeks before was a sign of the pressure he was under. If the centre-left is elected, it has pledged to pull Italy's contingent out, but overall it is very unlikely to roll back the tide of neo-liberalism.

This is why the continuing strikes are so important. On 15 April the 300,000-strong engineering union struck over the government's economic policy. Support for the strike was over 70 percent, and at one Sicilian factory there were over 600 pickets. Whoever is prime minister next year, workers will need their own organisations to defend their jobs and living conditions.