When The Economist put a picture of a beaming Silvio Berlusconi on its front cover with the title “The Man Who Screwed An Entire Country” earlier this year, one of my Italian friends in London received a call from her father, the owner of a small business in Southern Italy. He was apoplectic at what he saw as the sheer impudence of the British publication — and the country for that matter — for poking fun at Italy's beloved Prime Minister. What was she doing living in such a country?
Until very recently, such unswerving devotion to Mr Berlusconi, 75, wasn't untypical in Italy, especially among small business owners who make up a large part of the workforce. It was devotion that was utterly blind to unsavoury facts about the economy: Italy's unwieldy national debt (currently 120 per cent of GDP), tepid growth, and rising unemployment (8.3 per cent). It was blind to the many corruption scandals and legal battles that engulfed the Prime Minister over the years, not to mention his infamous “bungabunga” parties and general chauvinism towards women.
It — and the support of his party's right wing coalition partner, the Northern League — helped keep him in power, with only the odd break, since 1994. Rather like the villain of one of those thrillers who, just when you thought he was dead, suddenly revives to inflict fresh havoc, when one scandal seemed to be the definitive feller of Mr Berlusconi, he would spring back to life, popularity intact.
The charming assurer
Mr Berlusconi, a former cruise ship entertainer, knew exactly how to give people what they wanted. When he founded the Forward Italy party (now the Freedom Party) in 1993, the image of Italy he projected was far from the stodgy, state-encumbered and corrupt one many perceived it to be. Here was a man who'd risen from relative obscurity to owning a media empire so strong that it cut through the power of the state-run media behemoth. To others, especially in Italy's entrepreneurial class, it was he who rescued them from the ‘brink' of communism as they saw it — a fear that many Italians in that group had grown up with, and which he played on. He was living the story of a strong Italy that did things the Italian capitalist way, never mind what the rest of straight-laced Europe said. He didn't play by the rules and amassed a vast personal fortune.
ccording to the latest from Forbes , he's worth $6.2 billion. Favouring friends and family where the rest of Europe sought to establish strict non-cronyism? Sure! Objectifying women — politicians, business leaders, or any other professional for that matter? Why not! In a country still emerging from heavy conservatism and getting to grips with feminism and fair play, he made the waters muddier.
His unhealthy optimism, propelled across the country via his media empire, didn't hurt his cult either. “What crisis?” was the general attitude of Berlusconi over the past few years. While other European leaders fretted over the ways ahead for the crisis-hit region, Mr Berlusconi continued with his parties and quips, unperturbed.
As recently as last week, he maintained that there wasn't a fundamental problem with Italy, pointing to the difficulty of getting seats on flights, tables at restaurants, or hotel bookings. Why listen to those warning of a potentially calamitous future, when the charming assurer was in charge?
An Italian friend recently likened politics in her country to faith: Your political party went far beyond the polling station, it touched whom you associated with, it could divide families, and it wasn't necessarily outcome dependent. Such was the faith that Berlusconi built up around him.
Fading magic
Meanwhile, the Italian economy tottered along. It couldn't quite be described as a disaster though it wasn't performing as well as it should have. Italy has traditionally liked to think of itself as a big exporting nation that actually makes things, unlike other parts of Europe. Its luxury brands — Luxottica, Gucci, Prada — and its car makers are its best known, but others such as aviation and defence conglomerate Finmeccanica or Manuli, a packaging firm, hold their own on the global stage.
Yet when the rest of Europe began bouncing back from the crisis, Italy didn't, with much of the country hampered by government promotion of uncompetitive practices, rampant protectionism, a nepotistic culture, and minimal accountability and governance structures.
An IMF report published in July points to low educational attainment, the prevalence of small businesses — unable to achieve the necessary economies of scale to compete on the global stage — and the regional divide which has left the country heavily dependent on the north. Italy is forecast to grow marginally this year (around 0.6 per cent) and contract around 0.5 per cent next year.
Unsurprisingly, Mr Berlusconi's magic has now faded. After a gradual fall, his personality rating peaked at 56 per cent in December 2009 (when he was attacked by a mentally disturbed man brandishing a model of Milan Cathedral) but slumped to 28 per cent in September 2011, according to the latest data from pollster Ipsos Italy, as the scandals, repeated confidence votes in Parliament, and the economic reality check finally took their toll. Even my friend's business-owning father has admitted it is time for a change. On Saturday, crowds gathered in Rome to celebrate Mr Berlusconi's departure.
Confidence may recover
The good news for Italy is that things may not be as bad as they are in the other “PIGS” economies. IHS Global Insight notes that Italy still runs a primary budget surplus (before interest expenditure) and could probably afford the high rate of interest on its debts for several quarters, while general government interest expenditure has fallen to 4.5 per cent of GDP — less than half its level in the early 1990s. Private sector debt too is lower than that of many of Europe's worst affected areas (129 per cent of GDP against 169 per cent euro zone average).
Overall, it could mean that with the reforms demanded by Europe and the IMF and implemented by a unity government, led in all likelihood (as at the time of writing) by former European Commissioner Mr Mario Monti, confidence could gradually recover. And Mr Monti, the former head of the European Competition Commission, a body known for taking on some of the world's biggest companies, could push through some of the changes the country desperately needs.
However, it will mean unsavoury times in the form of tax hikes and cuts in public spending that will prove particularly hard on a nation used to being reassured by its perma-tanned Prime Minister that all would be okay.
It would be all easy to echo the rather sanctimonious sentiments of many European countries, who look down on Italy for its Berlusconi mania. As India knows all too well, scandal-immune personality cults in politics are far from unknown. India, moreover, remains free from a vast Berlusconi-style media empire, which drowns out critical views, viciously lashes out at opponents, and even seeps into public service broadcasting.
As for Mr Berlusconi, he will soon be out of power, but with his media empire intact he's unlikely to be very far from it.