October 2, 2013 7:02 pm

Berlusconi’s defeat is Italy’s victory

It is time for Letta to relaunch his government

Silvio Berlusconi has lost his political gamble – and that is welcome news for Italy. Last weekend the media tycoon and four-time Italian prime minister stunned the world when he announced he was pulling the plug on Enrico Letta’s coalition government. But for once Mr Berlusconi miscalculated. When Mr Letta sought a vote of confidence in the Senate yesterday, a score of dissidents from Mr Berlusconi’s own centre-right party – the flamboyantly named People of Liberty – chose to back the premier in defiance of their leader. Mr Berlusconi was forced into a rare and humiliating retreat, dropping his misguided call for a snap election.

This U-turn undoubtedly marks the low point in a political career marked by bombast and controversy. Since the 1990s, il Cavaliere has been the undisputed leader of Italy’s centre-right. In spite of his ineffective government record and an array of judicial and sex scandals, he has commanded fierce loyalty among his troops. Dissidents were first roasted by his media machine and then cast into oblivion. For the first time in two decades, the billionaire has discovered the limits of charisma and wealth.

Of course, Mr Berlusconi may delude himself into believing his last-minute retreat means he retains veto power over the government. But the spell is broken and his party is crumbling. A new parliamentary group that will support the government may be set up. Angelino Alfano, Mr Berlusconi’s former heir apparent who led the revolt, could join it. If the schism deepens, Mr Berlusconi’s party will no longer have enough votes to bring down Mr Letta.

Most importantly, this could be the last curtain call for il Cavaliere. This week a parliamentary committee will almost certainly eject him from the Senate following his conviction for tax fraud this summer. This month an appeal court is expected to impose a ban from holding public office. At 77, even the man once defined by his doctor as “technically almost immortal” no longer has time on his side.

The humbling of Mr Berlusconi provides much-needed relief for Italy. Since the formation of the Letta administration last spring, he has proved an unreliable coalition partner. His diktats made it impossible for Mr Letta to govern effectively. Political instability has also pushed yields on Italy’s sovereign debt higher. As the crisis recedes, rates have begun to come down.

The soft-spoken Mr Letta is the clear winner of the political battle in Rome. His speech in parliament was carefully crafted to persuade centre-right moderates to jump from the People of Liberty’s sinking ship. His skills as a mediator have clearly served him and his country well.

Mr Letta must now use his political capital to relaunch his government. He now has the upper hand. The dissidents on the right have shown no interest in an early election. On the left, the Democrats – Mr Letta’s own party – are busy with a leadership contest in December. Most seem to want the government to carry on.

The priorities are well-known and acknowledged by Mr Letta. The Italian economy has to regain competitiveness. Politicians can help by cutting the high taxes on labour and paying for it by slashing public spending. This will help to lift the economy out of the longest recession since the second world war. The government should also encourage the parties to pass a new electoral law. As last February’s inconclusive vote has shown, the current mind-boggling system is a recipe for instability.

Of course, Mr Letta may discover that the parties supporting him have no interest in passing meaningful reforms. In that case, he should step down and let voters have their say. The semi-paralysis of the political system, which has owed much to the malign influence of Mr Berlusconi, must end.

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