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.