A serious soap opera

By Guy Dinmore in Rome

Published: September 17 2009

Trembling with excitement, the 19-year-old party activist leaps to her feet as Silvio Berlusconi finally enters the outdoor arena in Rome to the applause of a crowd that has been waiting more than an hour as the sun sets behind the nearby Colosseum.Her boyfriend, with crew cut and black jacket ("He's a bit of a fascist you know," she jokes), and the middle-aged woman beside her join in the frenzy as the national anthem launches the rally organised by the Italian prime minister's new People of Liberty party.Taking to the stage in his habitual campaigning mode, Mr Berlusconi mixes jokes about soccer and beautiful women with tales of his government's achievements since routing the centre-left Democratic party in last year's elections. The highlight, he relates, was a five-hour telephone conversation with Vladimir Putin a year ago, in which he says he persuaded the Russian prime minister to halt his tanks short of Tbilisi, the Georgian capital.Despite his other successes - which apparently include persuading former US president George W. Bush to launch a massive rescue operation of his country's banks after Lehman Brothers fell, as well as saving Naples from its garbage crisis and building homes in record time for the victims of Abruzzo's earthquake - commentators in public and allies in private are muttering about "end of an era" and a need for change.Talk of early elections is starting to make headlines as Mr Berlusconi's coalition partners hurl insults at each other and question his leadership in what looks like areplay of the run-up to the collapse of his first government in just eight months in 1994.Four months of unrelenting coverage by opposition newspapers of the prime minister's alleged dalliances with prostitutes at bacchanalian parties are taking their toll. Some of his allies fear that he surrounds himself with self-serving admirers and glamorous women and lacks real friends or good advice.Italian politics has often been plagued by scandals, prompting outsiders to dismiss it as an amusing soap opera. Yet the country remains a major economic and political power, the current president of the Group of Eight leading industrial nations. Even by its own standards the current scandals - involving a prime minister who has dominated politics for more than a decade - are exceptional.On the ground however, the billionaire media mogul, who will soon turn 73, maintains his celebrity status. He has come out of his summer break in combative mood, issuing writs against newspapers for libel - suing to save press freedom, he says - and taking on powerful critics within the Catholic Church and his own party.Last week he pronounced he had passed another historic landmark by overtaking Alcide De Gasperi as Italy's longest-serving prime minister since the second world war, notching up seven years in office.Dismissing the talk of scandal that began in May when his wife, Veronica Lario, accused him of "frequenting minors" and promoting showgirls as politicians, Mr Berlusconi says: "Most Italians privately wish they could be like me and recognise themselves in me and the way I behave."Many agree - Francesca, the 19-year-old activist, among them. "He is charismatic, successful and gets things done." But what about the alleged womanising? "Lies," she said. "They only make him stronger. He recovers, like Italy."Whether Italy really is recovering from its searing recession amid mounting public debt and unemployment is open to debate. But with a personality-obsessed media and the main television channels either owned or influenced by Mr Berlusconi, scandals and political infighting provide a useful smokescreen to closing factories."Anyway, frankly," Franco Frattini, foreign minister and Berlusconi loyalist, told the Financial Times: "Italians don't care if he paid a prostitute or not."For the record, Mr Berlusconi insists (most recently at a joint press conference with a po-faced Spanish prime minister) that he had never paid for sex as that would deprive him of "the joy of conquest". Still, he confesses: "I am not a saint." He has not specifically denied spending the night of last November's US elections with Patrizia D'Addario, a 42-year-old escort who says she recorded their encounter with her mobile phone and was paid not by Mr Berlusconi but by Giampaolo Tarantini, a prosthetics entrepreneur under investigation for corruption, which he denies.If [German chancellor] Angela Merkel was 72 and had parties with 20 young men with tattoos and muscles on the night of Obama's election instead of being at the US embassy, what would happen?" asks Concita de Gregorio, editor of L'Unità, formerly the organ of the Italian Communist party and one of four newspapers being sued by the prime minister over several articles, one of which suggested he was impotent.Italy, she explains, is different. On one level, people are numbed by 20 years of soap operas and more than 90 per cent of Italians do not read newspapers. What other country, she asks, would have given a state funeral to a television quiz master, as it did last weekend for 85-year-old Mike Bongiorno, a former Berlusconi cheerleader. On a deeper level, she argues, Italy is different because its main protagonists are unchanged - unlike in Spain, for example, where a new generation has led the country out of the Franco era. "You have to look at the personalities, the dark forces, the Mafia, the Masonic lodges and the unexplained bombings of the past, and the secret services," she says. "None of this has disappeared."Mr Berlusconi has renewed his attacks on prosecutors in Naples and Palermo, who are about to re-open investigations into a series of Mafia bombings in the 1990s amid allegations of ties between the state and organised crime. The premier, who is protected by a law passed a year ago giving him immunity while in office from what the government calls politically motivated courts, accuses the prosecutors.Two pending court cases involving his associatesrisk generating further bad publicity for the prime minister. Senator Marcello Dell'Utri, a co-founder with Mr Berlusconi of the Forza Italia party in 1994 and a former business associate, will soon begin an appeal against his conviction for association with the Mafia. David Mills, the prime minister's British former lawyer is also appealing his conviction this year for taking a $600,000 bribe and withholding court testimony about offshore investments of Mr Berlusconi's Fininvest holding company.Mr Berlusconi, originally a co-accused in the Mills case, could not be prosecuted because of his immunity. This did not stop the judge from opining that Mr Berlusconi had been the source of the bribe. He denies it.Another significant legal date is October 6, when the constitutional court is expected to rule on whether the legislation granting immunity to Mr Berlusconi, and three other holders of high office, was constitutional. Observers think it unlikely the court will reject the legislation totally.Nor do they believe Mr Berlusconi will be brought down by reports that incriminating transcripts exist of intercepted telephone conversations between two ministers discussing details of the prime minister's supposed liaisons.This sense that Mr Berlusconi is walking on thin ice, taken together with his continuing strong showing in opinion polls, is fuelling speculation that he might try to call a snap election. An electoral system based on multiple lists of candidates would allow him to weed out dissenters in his own party at the same time as the walking wounded of the opposition Democrats try to find their third leader in two years.However Umberto Bossi, leader of the rightwing Northern League that gives Mr Berlusconi's coalition a majority in the upper house of parliament, has also brandished the threat of early polls. The resurgent League withdrew support to bring down the prime minister's first government in 1994.Meanwhile Mr Berlusconi cannot ignore the political power of conservative bishops, still smarting from the forced resignation of the editor of their newspaper after a smear campaign led by Il Giornale, the main attack dog in the Berlusconi media empire. There is talk of a renewed effort by the church to form a "grand centre" party.But Mr Frattini denies elections are on the cards. "I know Berlusconi quite well. He is a fighter," he says.Standing in the way of fresh elections is the widely respected figure of Giorgio Napolitano, the 84-year-old president. Mr Napolitano is a former communist - and he is aware of what is believed to be Mr Berlusconi's ultimate ambition: to succeed him.The president's term and that of the current parliament both expire in early 2013. Unless Mr Napolitano steps down early because of age or ill health - associates say he is determined to hang on to thwart the prime minister - the next president will be elected by the next parliament. If Mr Berlusconi really does have his eye on the presidency then, analysts note, a new parliament with a stronger majority would be in his interest.Such complex calculations help to explain the cut-throat nature of Italian politics, where only one postwar government - Mr Berlusconi's from 2001 to 2006 - has served its full term.This has been highlighted by the ferocity of attacks led by Il Giornale on Gianfranco Fini, a long-time ally and one of several contenders for high office. Mr Fini, who merged his formerly neo-fascist National Alliance with Mr Berlusconi's Forza Italia to create People of Liberty this year, has fought back, accusing the new party of a lack of democracy and needing a "change of direction"."Fini sees the end of Berlusconi and is positioning himself for the aftermath," says Ms de Gregorio.But with the ultimate survivor playing out a real-life version of Italian Big Brother - another Berlusconi-controlled television venture - no one is willing to predict quite when.

Roman republic

*The current government is Italy's 60th since 1946, when the republic was founded. Silvio Berlusconi is the 24th man to be prime minister

*Other prime ministers have been tainted by scandal. Giulio Andreotti, prime minister three times from 1972 to 1992, faced allegations of Mafia links (he was later acquitted). Bettino Craxi, prime minister 1983-1987, died in 2000 in exile in Tunisia following allegations of bribery and corruption

*Berlusconi first came to office in May 1994. His second stint was 2001-2006; his third began in 2008

*His media empire, Mediaset, runs Italy's three most-watched TV channels. As head of government he also has influence over Rai, the state broadcaster

*Berlusconi is often said to be Italy's richest man. He and his family were ranked at number 70 in the 2009 Forbes billionaires list with a fortune of $6.5bn (€4.5bn, £3.9bn)Business

Industrialist unrest in the land of the entrepreneur

Italy is the land of the self-employed entrepreneur. From fashion to food to heavy industry to the corner shop and café, small and generally family-run businesses are the backbone of the economy.Yet according to the annual World Bank Doing Business rankings published last week, it is becoming harder to start a business there: it costs more, and takes longer, than in other countries. Italy ranks 75thaccording to this criterion, a slide of 21 places. As a place to do business it comes 78th, between Panama and the Pacific island of Kiribati.It seems a poor showing for a country run by perhaps its most famous self-made entrepreneur - Silvio Berlusconi, the media mogul turned prime minister. This environment is one of a list of reasons offered by businesspeople to explain their waning faith in his ability, and willingness, to push through structural, labour and pension reforms they say are essential to make the economy more dynamic and competitive.The International Monetary Fund forecasts that Italy's economy will shrink 5.1 per cent this year; it contracted 1 per cent in 2008, and has grown at less than 1 per cent a year on average since 2000. M any observers in business and finance blame the government - and in particular Mr Berlusconi, who has been prime minister for much of the past decade - for this sluggishness.Guido Vitale, a Milan investment banker, says that people outside Italy "find it difficult to understand why a government with a majority in both houses of parliament is not able to pass the reforms that everyone on the right and the left knows are necessary".Another example of the sceptical view of government policy is the attitude of Italy's big banks to an offer of state aid. While banks abroad are starting to repay the aid, Italy's has not yet been distributed, and was particularly expensive.Bankers in Milan say the €12bn aid package was poorly executed. It is evidence, some say, of an anti-bank mood in government, which has hardened as the global financial crisis has bitten. Italy's biggest banks, which say they will decide on whether to accept it by the end of this month, could reject the aid outright, which would be a snub to the government.Adding to the mood of irritation with the governmentin business isembarrassment over revelations about Mr Berlusconi's private life. Some chief executives and financial industry figures argue that the controversy has been exacerbated by European stereotype of Italy, but most acknowledge the image being portrayed is a negative one.Does that matter? Professor Giuseppe Berta of Bocconi university says the scandal risks creating policy paralysis in the government if it drags on, which could prolong the recession. "The export sector is the most dynamic of the economy, and for them it is definitely a handicap," he says.Copyright The Financial Times Limited 2009.

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