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Good news from Italy

by Wolfgang Münchau, Eurointelligence

The current political crisis in Italy may turn out to be the best thing that has happened to the country in years – provided that it brings about long-overdue recognition that traditional left-versus-right politics in the country is "chronically incapable of delivering change" and new approaches are needed, claims Wolfgang Münchau in a Eurointelligence commentary.

The outgoing government of Romano Prodi has failed in the main task that it set to achieve two years ago: reforming the economy, Münchau writes. Prodi did not fail because the 20 months in office were too short to make notable progress, but “because he made a mess of the short time he had available,” he insists.

Münchau's final assessment of the Prodi years is crushing: "The Prodi government may have served its stakeholders, but the poorest Italians did not benefit. As a leader of the left, he was a disappointment. As a reformer, he was a disaster."

His failure is largely due to an "almost pathological desire for consensus," the author writes, adding that the early collapse of the Prodi government was a "near certainty" considering its "wafer-thin" majority in the Senate.

Prodi did not even attempt to reform Italy's "chronically unproductive" public sector, "a source of both excessive deficits and low productivity," the commentary says. Public sector reform must be the top priority for whoever leads the next Italian government, Münchau declares.

The polls predict that the centre-right politician Silvio Berlusconi, who has governed Italy twice in the past, will most likely emerge as the winner of the next elections, which are expected to be scheduled for this April, outlines the author.

Münchau expresses his hope that Berlusoni does not claim the premiership again, but rather brings together a grand coalition, which might eventually transcend traditional left-versus-right thinking in Italy.

The best option would be for Berlusconi to form a coalition between his Forza Italia party and the Partito Democratico. The latter arose last year out of a left-wing merger between Margherita and the Democrats and is led by current Mayor of Rome, Walter Veltroni.

However, since he believes that neither Berlusconi nor Veltroni would be capable of leading such a coalition, this task might fall to a competent outsider, such as the governor of the Bank of Italy, Mario Draghi, Münchau speculates.

His commentary concludes by saying that the coalition he describes might turn out to be "wishful thinking", but Münchau is certain that "it would offer better policies than any other alternative political constellation at the moment".

Published: Wednesday 6 February 2008