Italy on trial

Perhaps fittingly for a media tycoon, Silvio Berlusconi has an uncanny and perhaps even unconscious ability to capture the zeitgeist. Even though he has quite wisely attempted to keep clear of the limelight since his resignation, admirers and detractors alike have come to see the former prime minister as an emblem of everything that is right and wrong about contemporary Italy. On the one hand, his love of fine living and beautiful women is frequently presented as a reflection of the aesthetic and amorous sides of the Italian psyche, while his undoubted entrepreneurial spirit has been viewed as a powerful evocation of the business acumen that drove the country’s rise from post-war malaise to membership of the G8. On the other hand, however, his blasé attitude towards politics, his alleged links with organised crime, and his scandalous dalliances with under-age prostitutes have often seemed to testify to the less salubrious sides of the bel paese.

Berlusconi’s role as the ambiguous paradigm of modern Italy was brilliantly illustrated by his courtroom victory last week. In a case dating back to the 1990s, Berlusconi was accused of paying the British tax lawyer, David Mills, $600,000 to lie about his business affairs while under oath. After a series of trials, the case was dramatically thrown out on the grounds that the statute of limitations had expired.

The verdict has polarised Italy. It is not just that Berlusconi himself is a highly divisive figure, but also that the case goes to the very heart of the country’s current economic woes.

Burdened with massive sovereign debts and a plunging credit rating, Mario Monti’s government is struggling to streamline an overblown bureaucracy and bring order to Italy’s disastrously disorganised public finances. As Monti’s Greek counterpart, Lucas Papademos, is finding, this is as much a matter of tackling corruption and tax evasion as it is of introducing austerity measures. On February 19, Luigi Giampaolino, the president of the Italian Court of Auditors, opened the judicial year by drawing attention to the fact that wrongdoing, corruption, and malpractice are “still remarkably present in Italy and…are far in excess of what…actually comes to light”. In particular, the financial crisis has caused a worsening of fiscal probity: at a staggering 36%, Italy’s VAT evasion rate is among the worst in Europe, and there is no doubt that the absence of a “culture of legality” is damaging the country’s fragile recovery.

Berlusconi – who is also facing separate charges of tax evasion – is arguably emblematic of the problems faced by Monti’s government and of the culture of malpractice described by Giampaolino. To many Italians, his alleged attempt to pervert the course of justice is an example of the obstacles that stand in the way of the country’s economic future. As a consequence, the court’s verdict begs the question of whether Italy is, indeed, going in the right direction.

For il Cavaliere’s enemies, the decision was a travesty of justice, and Berlusconi has certainly not been vindicated. As Pier Luigi Bersani, leader of the Partito Democratico (PD), observed, “if Berlusconi seeks absolution, he could always renounce the statute of limitations.” Indeed, to Bersani, the fact that the ex-prime minister had resorted to using such a legal loophole testified to the mentality which has led Italy to its current economic predicament. While Berlusconi has wasted time with “various artifices” and legal obstructions, he added, “our country faces a productive, social, and financial disaster.” A thoroughgoing reform of the legal system is a necessary predicate of Italy’s recovery. Even Berlusconi’s erstwhile ally, Umberto Bossi, leader of the Lega Nord, claimed that the court had been influenced by political pressure from the Monti government, and implicitly drew attention to the legislative and legal obstacles which still stand in the way of fiscal reform.

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For Berlusconi loyalists, by contrast, the verdict was a welcome return to sanity. “The public prosecutor’s insane action is over,” claimed Angelino Alfano, secretary of the Popolo della Libertà (PdL), “as well as his attempt to fiddle with the calculation of the statute of limitations to obtain the merely moral condemnation of Berlusconi.” Using even stronger language, former education minister, Stella Gelmini observed that the statute of limitations had not allowed Berlusconi the opportunity to prove his innocence fully, but at least “renders vain and useless the judicial tenacity which he has endured and which no-one could revive.” Rather than Berlusconi’s alleged corruption being a symptom of Italy’s malaise, the trial itself has been presented as a product of the expensive, time-wasting prejudices of a politically-motivated legal system. If the verdict has demonstrated anything to il Cavaliere’s allies, it is that the reform of the judiciary is necessary to prevent public money being wasted and to streamline government.

Perversely, both sides are right. It’s not a matter of whether Berlusconi is innocent or not, but rather a matter of what the trial says about Italy itself.

On the one hand, there is no doubt that Italy is only going to overcome its current economic woes if it is capable of bringing greater efficiency to bear on its public finances. This necessarily means that the courts are going to get tough on tax evasion and corruption. Had Berlusconi actually been convicted, it would have been a powerful illustration of change.

On the other hand, however, there is a sense that Italy’s recovery is being impeded by the excessive politicisation of public services. It’s a problem with a long heritage. Since the 1950s, Italy’s civil service and legal system have been bedevilled by political bias and outright corruption, and despite the transformative effect of the infamous Tangentopoli (kick-back city) trials of the early 1990s, the ghosts of the past continue to haunt the country. Although Berlusconi’s habit of claiming that the allegations against him have been manufactured by “Communist” judges is clearly preposterous, and accusations of political bias amongst the judges are absurd, there is a sense that the bribery trial has detracted attention from the pressing need for a broader reform of Italian public services, and his conviction would have brushed the issue further under the carpet.

There is no doubt that Italy’s recovery is to no small extent dependent on wide-ranging administrative and legal reforms. But if they are to be effective, such reforms must be comprehensive. A crack-down on tax evasion, financial malpractice, and corruption is essential, but so is a thorough-going revision of the structure and composition of the country’s public services. In short, what is needed is a revolution in public affairs.

This only serves to illustrate the real problem facing Italy. Again, both Berlusconi’s detractors and his allies are right, but both are also wrong, and the polarising effects of the trial point to the underlying issue. Each side has appreciated the need for public-sector reforms, but each side is still seeing only half of the picture. The bitter political divisions which continue to divide the PdL and the PD are the biggest obstacle to the formulation of a comprehensive package of administrative reforms. Rather than unifying Italy’s parliamentarians, Mario Monti’s technocratic government is still hampered by the rivalries and bickering which Berlusconi’s last administration helped to create.

If anything, Berlusconi’s trial illustrates that Italy’s legislators need to draw a line under il Cavaliere, and need to stop working within the paradigm he created. Facing its most serious economic challenge of the last thirty years, Italy needs the politics of unity. The dramatic changes on which its recovery depends demand cross-party collaboration. Whether Berlusconi is in or out of jail ultimately doesn’t matter; but Italy’s future does. In the final assessment, it is Italy’s legislators, not il Cavaliere, who are now on trial.

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