Socialist turn

In bitterly contested elections to the Lower House of Parliament, the Centre-Left coalition wins a slim majority.

THE Centre-Left coalition led by former Prime Minister Romano Prodi just managed to get ahead of the House of Freedom (Casa della Liberta) alliance of Prime Minister Silvio Berlusconi in Italy's most bitterly contested general elections, held on April 9 and 10. In the 630-member Lower House of Parliament, the alliance led by Prodi secured 340 seats against the House of Freedom's 277. A narrow margin of 25,000 votes separated the two blocs. Under Italy's system of proportional representation, this translated into an extra number of seats for the larger parties. The difference was even smaller in the Senate where only 0.1 per cent of the votes separated the two groups. It meant 158 seats for the Centre-Left against 156 for the House of Freedom.

The situation remained confusing in the immediate aftermath of the results. The slender margin provoked calls for a review of the votes won by the ruling coalition. Berlusconi claimed that there had been irregularities in the voting. More than 80,000 ballots were said to be disputed until it was officially announced that around 5,000 ballot papers were being checked. This small number of contested ballots would have little bearing on the result. The final results are provisional until confirmed by the country's highest court, the Court of Cassation.

Further, the configurations of a constitutional timetable imply that the formation of a new government may take some more time. This is because the convocation of the new legislature to elect the new government almost coincides with the expiry of the term of the President of the Republic, Carlo Azeglio Ciampi, in May.

A new President is to be elected by both Houses of Parliament, and the Leader of the House may be required to await an invitation from the new President to form the government.

The elections turned out to be a veritable referendum on giving Berlusconi a second term in office. Some of the data bear out this impression. For one, the voter turnout was above 80 per cent. Besides, Berlusconi's was the only post-War Italian government to have completed its full five-year term in office on the strength of a substantial majority.

It is the balance sheet of these five years that gave the elections and the preceding campaign a sharp edge. The average Italian has felt the pinch of the economic reality in terms of a reduced spending capacity. Last year Italy registered no growth at all, and even went into recession for a period. Its public debt hovers at levels of over a 100 per cent of gross domestic product (GDP). The economic growth registered during the last five years has been 3.2 per cent, which is less than half the eurozone growth rate of 7.1 per cent.

The European situation is also a factor. Italy's weakness seemed attributable more generally to the eurozone given the slow growth of the economies of Germany, France and Italy, which together make up 70 per cent of the European Union's GDP. All three countries face the familiar European problem - excessive labour market rigidity and high public spending and taxes. However, while France and Germany have revived to an extent, the slowness of the Italian growth rate is principally for structural reasons.

The boom of the 1950s and 1960s created an economy dependent on small industries concentrated mainly in the north and specialising in the production of textiles, food, machines and household appliances. Firms that could maintain competitiveness and costs in inflationary periods were its strength. However, both productivity and competitiveness have been on the decline, while exports in traditionally strong areas, such as textiles, leather and consumer durables have suffered from the competition offered by economies such as China and India.

The situation has translated into a high rate of unemployment, particularly among the youth. One solution to the unemployment problem attempted in recent years is short-term employment contracts (precariato), which, however, have come to be regarded as a major problem and become a significant campaign issue. The contracts often offer poorly paid jobs, mostly for a few months and without the benefits that go with regular contracts of employment. As a result, most of the short-term contract holders continue to be in a state of uncertainty.

Many political observers feel this was the most bitter election campaign in memory, with insults and accusations being traded at random. Even sections of the electorate were not spared. Berlusconi, addressing journalists at the close of the campaign, said those who voted against him could be "coglione" (meaning idiot or stupid).

Berlusconi regularly harped on the danger represented by the communists, which appears to have worked in the richer north where his party, Forza Italia, got a large number of votes.

Towards the end of the campaign, Berlusconi tried to prop up his fortunes by focussing on the risk of higher taxes if the Left came to power. During the second televised debate with Prodi, he promised to remove property tax on the first house of the family, a move that would reduce funds for the municipalities

Of the 50-million-strong electorate, a little less than half have voted for the Freedom House alliance, which includes the neo-fascist Alleanza Nazionale and the Northern League, which champions the interests of the north.

The fact that Berlusconi's campaign in the final weeks of electioneering was not impressive enough was noticed even by his allies. Two of his major allies publicly criticised his performance in the television debate. Pier Ferdinando Casini, leader of the Christian Democrats (UDC), criticised Berlusconi for harping on the performance of the government instead of indicating in concrete terms a programme for the future. Gianfranco Fini, leader of the right-wing National Alliance, said Berlusconi had been emphasising that everything had gone well during his tenure, but from the perspective of undecided voters there were still many problems.

During its campaign the Centre-Left Opposition laid much emphasis on the grievances of the youth. It has been consistently opposing short-term contracts, and this approach appears to have found acceptance among the youth. Nearly three million young people became eligible to vote in the elections to the Lower House.

Prodi's proposals on labour is aimed at relaunching the competitiveness of the Italian economy. He proposes to reduce the employers' social security contribution as a way of cutting labour costs. In order to make up for the resulting revenue loss, Prodi plans taxes on higher categories of inheritance and financial incomes as well as improved tax administration to tackle the problem of evasion. These taxation proposals provided a major plank for the ruling coalition to attack the Centre-Left. The narrowness of the victory margin can, in part, be ascribed to its success in projecting a possible Centre-Left administration as one that would bring in more taxes.

With a distinguished background in academics, Prodi has vast managerial experience based on his stewardship of IRI, the giant Italian public holding company. He was able to turn around IRI's finances during his tenure in the 1980s. He returned to the helm of IRI in the early 1990s and oversaw some major privatisation programmes of certain IRI holdings.

Prodi's political activity began in the mid-1990s and he was soon designated to head the Centre-Left Olive Tree coalition for the elections of 1996. The coalition won and Prodi's tenure as Prime Minister lasted for two years until his government fell owing to the withdrawal of support by the communist group, the Rifondazione Comunista.

Thereafter Prodi's career entered the European phase with his nomination as President of the European Commission in 1999. Two landmark measures under his presidency - the launch of the common currency and the enlargement of the E.U. with the addition of 10 new member-states from Eastern Europe - established his credentials as a staunch champion of the European project.

A criticism that Prodi has encountered in this round of elections has been that he is a politician without a party and as such vulnerable to the pressures of the bigger parties within his Left alliance. His earlier election as the prime ministerial candidate of the Centre-Left through the mechanism of primaries has allowed him to demonstrate his popular support. More than three million electors of the Centre-Left voted in his favour.

The vote in these elections reflects a desire for change. The biggest challenge for Romano Prodi would be to unify the country, divided by the vote and the issues that have emerged. He had emphasised the need for unity in his second television debate with Berlusconi.

Even within his coalition he would need to balance the interests of diverse groups that range from the centrists and liberals on one side to the communists on the other.