Berlusconi's Inaugural Address Dominated by Need to Bring Economic Growth to Italy

Italy's Prime Minister, Silvio Berlusconi, held his inaugural address to the Chamber of Deputies—the lower house of the country's legislature—on Tuesday (13 May). In an uncharacteristically subdued and conciliatory speech, Berlusconi pledged to address the country's dire economic situation, in a bid to build a spirit of bi-partisanship in the bitterly divided Italian legislature, as well as promising not to nationalise the near-bankrupt national air carrier Alitalia. Citizens' concerns over crime and immigration also featured in the premier's speech. He also mentioned issues affecting national politics, such as the serious waste management crisis in the southern city of Naples and relations with the European Union (EU) and the United States. The speech was followed by confidence votes in the Chamber of Deputies (today) and the Senate—the upper chamber of parliament—(tomorrow), which are expected to be easily won by Berlusconi, considering his comfortable majority in both houses.

An Economy Flirting with Recession

Unsurprisingly, Italy's economic problems took centre stage in Berlusconi's inaugural address as the premier re-assured parliament that he would take a proactive approach to fiscal tightening. His statements were designed to address concerns expressed by fellow politicians and businesses analysts about Berlusconi's record for letting growth slide and debt pile up as seen during his previous term in office in 2001-2006, by the end of which the country was left with a budget deficit equal to 4.4% of GDP. Berlusconi promised once again to realise his electoral pledges to reduce income tax, housing tax, corporate tax, and value-added tax (VAT), as well as lowering tax revenues as a proportion of GDP to 40%. This was joined by a promise to increase the efficiency of spending, renewing infrastructure, aid in the development of the largely agrarian south and reducing the costs of public administration and the country's debt, which was worth 104% of GDP at the end of 2007.

However, such pledges raise the question about Berlusconi's seriousness in continuing to reduce the country's large budget deficit which was just brought under control by the previous centre-left administration, allowing the European Union (EU) to drop the excessive budget deficit (EDP) procedure against Italy. Berlusconi also expressed hope that by essentially re-starting the economy—the International Monetary Fund (IMF) has a forecast of just 0.3% for 2008—he "can put an end to the paralyzing pessimism now circulating." However, this is not only dependent on improving Italy's economic fortunes but also on attacking the privileged political class which many perceive to be a drain on society and a source of corruption that does not address the needs of ordinary citizens.

Non-Economic Issues Also Feature Prominently

Berlusconi also took time to address issues such as crime, immigration and the Roman Catholic Church's (RCC) concerns over abortion. Italy's new centre-right government has already caused controversy and international tension by announcing that it is looking to increase anti-immigration measures in general—specifically against Romanian immigrants and Roma accused of a spate of crimes in recent months—as well as re-evaluating Italy's participation in the EU-led passport free Schengen Zone. He also returned to his previous policy of U.S. endorsement, vowing that Italy would be "a pillar of the friendship between Europe and the U.S." This could raise some concerns at the national level since during his previous term in office Berlusconi followed the U.S. and led Italy into the Iraq war, despite severe opposition at home.

Berlusconi also returned to one of the more controversial aspects of his pre-electoral campaign by once again placing the RCC and abortion at the centre of national politics by vowing to address the "causes of abortion", which the Church wants banned. A further priority for Berlusconi is to resolve Naples' ongoing waste-management crisis, which has provoked a lawsuit filed on 6 May with the European Court of Justice (ECJ). In a typically populist move, the premier promised to hold a cabinet meeting in Naples next week and pledged to be in the city at least three times a week until the crisis was resolved. This type of rhetoric has clouded the fact that he has no way of solving the issue in the short term and that there has been no coherent policy presented to deal with the corrupt regional administration as well as the Neapolitan mafia, which controls waste management in the area. Berlusconi also reached out to the centre-left opposition and called for increased dialogue between the two sides in efforts pass essential but painful structural reforms. Furthermore, Berlusconi would also need the cooperation of the opposition to realise reforms to streamline decision-making, such as reducing the number of lawmakers—currently almost 1,000—and reducing regional administrations and bureaucracies.

Outlook and Implications