Italy’s troubled government. Cavaliere in a corner

The Italian prime minister has done far too little to reform the economy

EVEN by his own standards, Silvio Berlusconi, Italy's prime minister, has had a tough few weeks. His party, Forza Italia, did badly in last month's European and local elections; last week it even lost an election in Mr Berlusconi's home bastion of Milan. The economy is moribund: Italy is vying with Germany for the title of sick man of Europe. This week Mr Berlusconi lost his finance minister, Giulio Tremonti, forced out by two of his coalition allies, the far-right National Alliance and the centre-right former Christian Democrats - and the country's debt was promptly downgraded by a big rating agency.

Mr Berlusconi's response to these troubles has been characteristically insouciant. He blamed the Euro-election reverse on ballot-rigging by the opposition. Instead of replacing Mr Tremonti, he has temporarily taken on the finance job himself (though he tried first to get Mario Monti, the EU competition commissioner, to do it). This week he was in Brussels lobbying euro-area finance ministers not to issue a formal warning to Italy for letting its budget deficit breach the stability-pact ceiling of 3% of GDP.

By promising more spending cuts, he won the day, though in truth only because so many other finance ministers are also breaking the rules. In all other respects Mr Berlusconi has lost. His oft-promised tax cuts are no nearer fruition - indeed, it was his partners' objections to them that led to Mr Tremonti's ouster. Italy's public finances remain a mess, with public debt standing at 106% of GDP and the deficit forecast to hit 4% of GDP in 2005. It was after Mr Berlusconi had taken over as finance minister that Standard & Poor's downgraded Italy's debt, the first time this has happened to a country in the euro. As the agency knows, Mr Tremonti held the deficit down only through temporary, one-off measures. He said himself this week: “It is difficult to manage the world's third-biggest debt pile without being its third-biggest economy.”

The Economist declared in 2001 that Mr Berlusconi was unfit to rule Italy because of his murky business past, his continuing judicial problems and his considerable array of conflicts of interest. The case that many Italians then made for giving him a chance despite all this rested on the belief that he would reform the economy and sort out the public finances. Yet three years on, he has achieved precious little in that regard. Instead, he has spent too much time dealing with his judicial problems - including pushing laws through parliament that seemed designed mainly to bolster his legal defences. And far from making good on his repeated promises to resolve his conflicts of interest, he has aggravated them. A new media law will allow his family's Mediaset empire to expand its reach. Now, as finance minister, he has become the main shareholder in all state companies, including RAI, the state television network whose chairman recently resigned in protest over political interference. In a formal sense, Mr Berlusconi today controls all of Italian television.

Given the fraught state of his coalition after Mr Tremonti's departure, Mr Berlusconi's continuing promises of decisive action on the economy sound increasingly hollow. Earlier this year, Italy was picked out by the London-based Centre for European Reform think-tank as the biggest villain standing in the way of the EU's Lisbon agenda of economic change. Even those inclined to overlook conflicts of interest and judicial troubles must regret that Mr Berlusconi has failed to use his time in office to push the cause of reform in Italy.

Editorial says that the Italian Prime Minister, Silvio Berlusconi, has done far too little to reform the economy of Italy.

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