Fearing Italy

The grand coalition of Social Democrats and Conservatives lasted just five months in Italy. Voters had not lent any one party a majority during February elections, thereby forcing ex-premier Silvio Berlusconi's center-right party to enter an uneasy coalition with center-leftists. As a result, Prime Minister Enrico Letta kicked off a nearly impossible campaign: bringing stability to Italy and leading it out of a dramatic economic crisis.

Now, the government has failed ostensibly due to Silvio Berlusconi's irresponsible, ego-centric behavior. The convicted tax-evader still clings to his post in the Senate, extorts the government and uses his compliant party in the process - running it like one of his own private companies. Berlusconi, who turned 77 on Sunday (29.09.2013), withdrew his ministers from the government because the Senate aims to put a binding legal verdict against him into force. Ice-cold, without considering the damage it could cause both to Italy and perhaps to all of Europe, Berlusconi pulled the plug. Or has he just gone crazy after all, as Prime Minister Letta - among others - have suggested?

Coalition without common ground

While Berlusconi has blustered across the big stage, it's been clear behind the scenes of Rome's political theater since the start of the grand coalition that the Left and Right parties' approaches to economics and tax policy simply do not cohere. To this day, the government has not managed to implement any significant changes. A planned increase in the value-added tax and a revision in property taxing keep getting pushed back. Italy is lagging behind when it comes to the most pressing reform schemes. Projects to combat unemployment hardly exist.

In May, the European Union abandoned its excessive deficit proceedings against Italy. Yet it now appears that the country will have to incur greater debt than planned. October will see the moment of truth - when Olli Rehn, EU Commissioner for Economic and Monetary Affairs and the Euro, will lay the figures on the table and review Italy's budget for the coming year. That's if a budget draft exists in the first place - without a fully functional government in the country.

No one is saying it loudly, but many - particularly the other 16 partners in the eurozone - feel incomprehension or even horror at the chaos in Italy. The economic data had just improved slightly in the country. Do the parties really not have anything better to do than ensure that the nation comes to a standstill again for months?

Europe heaves a sigh

The financial markets have offered Italy a little relief in the past year. The European Central Bank bought Italian bonds and guaranteed further intervention. But even since Friday, the price Italy has to pay for excessive debt has increased again. And the "bond spread," which Belusconi vilified heavily in his election campaign as a German invention, has become harsh reality. Interest rates could crush Italy any day now. The crisis is only slumbering; it's not yet been overcome.

If things turn worse for Italy, then the rest of southern Europe will also suffer. Ultimately, the crisis could seize the whole eurozone again. Northern European countries would have to shell out more money and offer more security to stabilize Italy.

Italy could face new elections

In November 2011, state and government leaders forced then Prime Minister Berlusconi from office because Italy was rapidly heading for economic disaster. But even that massive intervention did not do much good: Berlusconi is still calling the shots. The situation in Italy has improved only slightly, and now politicians in Brussels are stumped.

That's why they have been begging the players in Italy for days not to descend into another crisis of government. But it's too late. The country is already in the throes of that crisis, which will end in new elections in a few months. Until then, the aged President Napolitano could once again introduce a technocratic government. That would be the last measure to minimize Italy's plight on other euro nations. But even a technocratic government normally cannot withstand more than a year.

Berlusconi ups the ante?

Three different camps are facing off in Italy: the Socialists, the Berlusconi boys and the followers of absolute naysayer Beppe Grillo. How the "Grillini" - the frustrated protest voters - will now behave is uncertain. Grillo has repeatedly predicted that the Italian system will strangle itself before something new can take its place. He could end up being right.

But the Berlusconi camp is stronger than those outside Italy may presume. Despite all his scandals and escapades, nearly one-third of voters chose Berlusconi in February's elections. The political zombie aims to reestablish his old Forza Italia party and make a bid for head of state during the next elections.

In Italy's interest and that of Europe, one can only hope that Berlusconi's plan does not come to fruition. But Italy can only be governed if euro-opponent Beppe Grillo is willing to budge or the realpolitik wing of the Grillini defect to the Left.