Italy. Big mountains, small mice

After complex political intrigues, pension reform scrapes home

WHEN a hard-pressed prime minister uses every trick in the book to ram through painful changes, some progress is eventually made; that is as true in Rome as it is Paris. But in Italy, the struggle is even harder, and the fruits more modest.

On July 28th, the Italian parliament approved the first structural economic reform to be enacted in the three years that Silvio Berlusconi's government has been in office. The new law, which changes the pension system, is not exactly radical. It raises the retirement age from 57 to 60 and does not take effect until 2008. But thereafter it should save the treasury around 0.7% of GDP a year, and it goes some way towards eroding Italy's huge debt (of 106% of GDP).

Yet just to get this measure approved, Mr Berlusconi had to resort to manoeuvring that would have bewildered a Byzantine courtier, and a confidence vote that might have felled his government. As usual, his problems had less to do with the disunited opposition than with the parties in his own fractured coalition, each of which has enough seats in the legislature to bring the government down.

This time, the would-be spoilers were the Northern League, populists who speak for prosperous areas that adjoin Europe's heartland and loathe subsidising the chaotic south. No matter that the pension bill was the work of one of the league's own ministers, Roberto Maroni. The northerners needed a hostage. Another party in government, the Christian Democratic Union of the Centre (UDC), was threatening a measure even dearer to the league's heart, a constitutional reform offering more autonomy to the regions.

The UDC - the remains of the old Christian Democratic Party, which dominated the post-war scene - has of late taken over from the league as the loosest cannon on the deck of Mr Berlusconi's storm-tossed ship. Puffed up by his party's good showing in last month's European elections, when it raised its share of the vote to all of 5.9%, the UDC secretary-general, Marco Follini, has been demanding changes to the government's programme.

So far, he has been getting everything he wants, including an important change in economic policy. After the hard-right National Alliance (the second-biggest coalition partner) on July 3rd unseated the finance minister, Giulio Tremonti, the prime minister took over that portfolio. He hoped to keep it for as long as needed to pass the tax cuts on which he has staked his political survival. But the UDC, which is much warier of tax cuts, demanded that he should relinquish the job.

On July 16th, Mr Berlusconi appointed a senior civil servant, Domenico Siniscalco, who promptly told him the tax cuts were unrealistic, at least for now: what Italy needed instead was €24 billion ($29 billion) of spending cuts to keep its pledges under the EU's stability and growth pact.

A week later, Mr Berlusconi again recognised the UDC's increased weight when he named its president, Rocco Buttiglione, to take the place of Italy's highly respected EU commissioner, Mario Monti. Opposition politicians deplored the move, saying it would mean Italy got a lesser post than the commission vice-presidency reportedly earmarked for Mr Monti.

But Mr Buttiglione's nomination opened the way for a compromise. It helped widen a rift in the UCD between Berlusconi loyalists like himself and the mutineers under Mr Follini, who subsequently agreed to further talks on constitutional reform in August. That temporary retreat encouraged the league to drop the other knife being held to Mr Berlusconi's throat, over pension reform. Even so, a deal was only reached after a call by the prime minister to the league's leader, Umberto Bossi, who is lying in a Swiss clinic after suffering heart failure. At this rate, he may not be the last politician to do so.

The opposition, meanwhile, wonders how long Mr Berlusconi can simply lurch from one cliff-hanger vote to the next. Polls suggest that if his government fell, he and his allies would lose the ensuing election. So the most plausible answer to the opposition's question is: “a while yet”.

After complex political intrigues, pension reform proposals have scraped home in Italy.

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