Mr. Berlusconi's Defeat

Wednesday, April 12, 2006

IT APPEARED yesterday that Italians had narrowly voted to oust their longest serving prime minister since World War II -- Silvio Berlusconi, a maverick magnate who had pushed Italy's democratic institutions to the breaking point without delivering on his promises of an economic miracle. If confirmed -- Mr. Berlusconi was promising a challenge -- his defeat will relieve civil libertarians who worried about his domination of the Italian media and his aggressive efforts to combat criminal charges against him by passing special laws and bullying prosecutors and judges. It will cost the Bush administration a friend, though U.S.-European relations aren't likely to be affected much overall. Unfortunately, it offers little hope that Italy will overcome the deeper political disease that is crippling much of Europe: a palsy of leadership in the face of globalization's challenge.

Mr. Berlusconi portrayed himself as a pro-capitalist reformer in the tradition of Britain's Margaret Thatcher, something Italy and many of its Western European neighbors desperately need to adjust to intensifying global trade and competition. But he did little to deregulate the Italian economy or reform social benefits in his five years in office -- which helps to explain why Italy's growth has averaged less than 1 percent a year, the lowest of any major industrial country. Mr. Berlusconi's legacy may be the discredit of the very idea of free-market reforms.

If so, that will only compound the obstacles facing Italy's new -- and old -- prime minister, Romano Prodi, a charmless professor who served a term in the 1990s as well as a lackluster stint as president of the European Commission. Mr. Prodi pushed through modest reforms and guided Italy into the common European currency. But even if he had a taste for the more radical action that is now needed, he would probably be blocked. His margin of victory was razor-thin, leaving him with a majority of just one seat in parliament's upper house. His coalition partners range from moderate Catholics to Italy's proudly unreconstructed Communist Party. His platform promises to reverse one of the only tough steps Mr. Berlusconi took, raising the retirement age from 57 to 60 in a rapidly aging society.

Italy's choice of a weak and divided government came the same day the right-wing government of neighboring France retreated, in the face of street demonstrations, from its pathetically modest attempt to liberalize labor law in order to reduce a youth unemployment rate of more than 20 percent. The surrender by President Jacques Chirac followed his failure last year to persuade his country to accept a European constitution. Mr. Chirac and Mr. Prodi have been leading advocates of the idea that the European Union should coalesce into a superstate capable of countering the United States. Today their ambition appears far-fetched. European governments seem unable to summon the strength even to address the economic sclerosis eating away their prosperity -- much less challenge American power.

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