Italy’s government: Of milk and war

Date: 29/03/03

Italy's prime minister, Silvio Berlusconi, is having a hard ride

AFTER months trying to please everybody - George Bush, Tony Blair, Vladimir Putin, the United Nations, the European Union - Silvio Berlusconi, Italy's prime minister, has made up his mind on two matters. The weightier issue is to do with the war. The frothier one, though a portent of a possible change in Italy's attitude to the EU, is to do with milk. Both decisions have caused ructions.

Mr Berlusconi's big decision on the war has been a judgment about how how bellicose to sound. He has been broadly behind the Americans from the start, but most of his countrymen are not. So Italy, like France and Germany, he told parliament in the days before the assault on Baghdad began, would let American forces use its airspace and its bases in Italy, provided they were not actually launch-pads for attacks. But his government would not send a single man into combat - “nor has America asked us to,” said the foreign minister, Franco Frattini.

That softly pro-war stand nonetheless displeased the Catholic church (Pope John Paul is utterly opposed to the war), annoyed the centre-left opposition and enraged pacifists. But its equivocal character seemed to reassure two people he cares about a lot. One was Mr Bush, who sent Mr Berlusconi a warm letter hailing Italy as a worthy American ally. The other was Italy's president, Carlo Azeglio Ciampi, who had noted that his country's constitution “repudiates war as a way of resolving international disputes”. So far he has not publicly complained about the “minimum logistical support” that the Americans have asked of Italy.

In the milk dispute, Mr Berlusconi may have gained a bit more public support, especially in the countryside and in the north. “This is a sign of a new European policy aimed at protecting our national interests,” said the finance minister, Giulio Tremonti. But Italy's many believers in closer European integration are worried by the increasingly Eurosceptical tone of their prime minister. And some of Mr Berlusconi's fellow European leaders, notably a visibly furious Jacques Chirac, the French president, were extremely irritated by his readiness to hold up proceedings - and delay agreement over an EU-wide savings-tax deal - during a European Union summit on March 21st.

The issue at stake was a fine of €648m ($690m) imposed on Italy because its dairy farmers had hugely exceeded their EU-ordained milk quotas. While EU leaders were trying to discuss progress towards the goals of the liberalising agenda signed in Lisbon in 2000, Mr Berlusconi was seeking to block all other business unless the milk fine was reduced. In the end, his counterparts agreed to consider the matter anew. But the Italian gambit appalled leaders of the countries at the old core of the Union who expect Italy to remain a model of Euro-helpfulness.

Not so sweet back home

The Italian prime minister has worries of his own, besides. People will soon be assessing his first two years in office. He will claim to have been unlucky, starting with the riots that spoiled his first big international showpiece, a meeting of the G8 group of rich countries in Genoa, followed by the global gloom after September 11th. Whether or not people are forgiving, they will have noticed that Italy's economy and social fabric have continued to fray, yet the cash to mend it is in ever-shorter supply. The economy is groaning. The Bank of Italy predicts that it will grow by no more than 1.3% this year and, if the oil price shoots up, matters could become really serious. Thanks partly to a strengthening euro, exports are shrinking. And Italy is becoming less innovative: a recent survey listed Italy as holding just 1.8% of the world's high-tech patents, against France's 7.3% and Germany's 15%.

A string of reforms has been promised, postponed or apparently forgotten. Nothing has been done about pensions, which gobble up nearly 15% of GNP, the highest figure in Europe. Italy's infrastructure is creaking, in particular its roads are clogged and dangerous. And the labour market is still too rigid, despite a useful bill that passed its first stage in parliament last month. But the law still, in effect, makes big firms take on people for life - or not take them on at all. Many young university graduates find it hard to get jobs.

But there are some brighter spots. The education minister, Letizia Moratti, has enacted a new plan to improve schools by, among other things, making children start at an earlier age and study English and computers from day one. Everybody will have to stay at school for at least 12 years, a couple of years longer than before.

Even if Mr Berlusconi starts seriously tackling such shortcomings as the labour market and pensions, he will still be hobbled by his failure to confront the conflicts of interest that have dogged him, as Italy's richest man, since the day he became prime minister - not to mention his manifold problems in the law courts, where he is still on trial for bribing judges. Nearly two years after taking office, a promised law to deal with his conflicts of interest is still to be enacted. He has a personal interest in a takeover battle for Generali, Italy's biggest insurance company. Other conflicts concern his football club, AC Milan, whose chairman is also head of the national football league.

Mr Berlusconi's media interests still abound. He owns the three largest private channels and, as prime minister, has much influence over RAI, the three-channel state television company. Efforts to put a new team on the board of RAI have been fraught. The upshot, after a row that lasted several weeks, is that the new chairman is nominally on the left while the other four new board members are on the right. Several may do a fair job but it is patently hard for Italians to feel confident in their public broadcasting services' impartiality when their prime minister is so embroiled.

Italy's Prime Minister, Silvio Berlusconi is having a hard ride.