Sunday, April 02, 2006

Italy Between No Alternatives

Next Sunday and Monday the Italian voters go to the polls. And we are now entering the final week of a very heated campaign.

On the surface of it, it is Silvio Berlusconi against Romano Prodi. But in reality it is two rather complex coalition alternatives. And how they shape up will determine the extent to which a coalition can actually implement the necessary measures.

So far, the election campaign has been called a "carnival of populism" by the Chairman of the Confindustria business association. With the Italian economy facing obvious structural problems, neither side has really tried to address them properly.

Berlusconi is warning that the Communist will tear a Prodi coalition to pieces as they did after the 1996 election, and Prodi points out that Berlusconi has been delivering practically nothing of what he had promised.

Neither accusation is wrong. In a sense, it's a campaign of competing weaknesses that we are witnessing in Italy.

The Prodi coalition has been ahead in the opinion polls, although no such are published during the final week. But in the last few days it seems to have been suffering from confusion concerning its tax policies.

There is little doubt that it would be good for Europe and for Italy if a Berlusconi who often turns his performance into pure disgrace would disappear from the scene. His inflated ego and lack of seriousness on serious issue is making harm to his party as well as to his Italy.

But that does not mean that there are reasons to be particularly optimistic concerning the possibilities of a Prodi coalition. It will know what it is against - but will it know what it is in favour of? And some of its proposals are clearly going go be detrimental to the reform potential of the economy.

What Italy would really need is a party that dares to produce a strong package of pro-growth reforms. Sooner or later that will be called for anyhow.

Absence of reforms now means decline of the growth potential in future years.

And this will affect not only Italy, but all of Europe.