Politics is always a roller coaster so after three and a half years as prime minister, Silvio Berlusconi has learnt to hold tight on the downs and enjoy the view on the ups. Over the summer, he was sitting precariously on a disintegrating carriage rattling uncertainly and rapidly downwards.
The results of local and European elections last June went from dreary to dire, and Berlusconis allies were threatening to leave the government coalition over the constitutional reform bill. On one side the Lega Nord wanted it passed immediately, giving maximum powers to the regions. On the other, Alleanza Nazionale wanted to maintain central government power, and the centrist Unione Democratica Cristiana wanted to support the south; both were worried about the potential cost of what Italians now called devolution, in order to distinguish this bill from the so-called federal reform passed by the centre-left government in 2001.
In August there was a fist-fight in the chamber of deputies between coalition deputies who disagreed over measures to rescue the state-controlled airline, Alitalia. The government had to ask for a vote of confidence to move its pension reform bill forward and the new economics minister, Domenico Siniscalco, made it clear that he did not like his bosss proposed tax cuts.
Then by the end of September, all seemed to have changed.
First there was the release of the two Italian aid workers, Simona Torretta and Simona Pari. After three weeks being held hostage in Iraq the two women were released unharmed, with the Italian government saying that diplomacy had carried the day and that rumours of a $1 million ransom (The Sunday Times said e4 million) were completely false. Right-wing papers laid into the two women for being ungrateful and anti-Italian when they commented on their captors good behaviour and asked that Italian troops be withdrawn from Iraq, but none of them criticised the prime minister. Nor did anyone from the left-wing opposition parties, which had given full support to the government in the negotiations. Berlusconi was calm and statesmanlike, quietly pleased with himself rather than ebulliently cock-a-hoop.
It also looked as if the constitutional reform bill was going to make it through the chamber of deputies (it passed the senate in March) with only minor amendments and no major rifts in the coalition. This would be a huge relief for the prime minister as it would give him the greater powers he has been yearning for if he is re-elected and, more immediately, it would remove any threat of the Lega Nord jumping out of the coalition.
There was icing on the cake too. September figures showed that inflation was down to 2.1 per cent over the same period last year, compared with 2.3 per cent in August. This is the lowest rate since December 1999. At the same time, the International Monetary Fund released figures saying that unemployment in Italy was down to 8.3 per cent from 8.7 per cent last year and that it should end the year at 8.2 per cent. On the budget front, tax cuts once again seemed to be a real possibility.
As usual, the centre-left opposition remains divided on most issues, particularly the war. The moderates in both the Margherita and the Democratici di Sinistra parties want to maintain the presence of Italian troops in Iraq, while Rifondazione Comunista and the Verdi still want their immediate withdrawal.
The view from the top of the curve looked good for the prime minister as he dreamt of another five-year term but the way down is never far away.
If the political opposition is divided and uncertain, the business community, the Bank of Italy and the trade unions show much more resolve. Since his appointment as president of the Confindustria six months ago, Luca Cordero di Montezemolo has been highly critical of government attempts to revitalise Italys sluggish economy, as has the president of the Bank of Italy, Antonio Fazio. Neither figure looks like an obvious opponent to a centre-right government that proclaims itself business-friendly and supportive of the free market. But both Fazio and Montezemolo are very worried about Italys decline. The unions have never hidden their dislike and distrust of Berlusconi. Together they are likely to disturb the prime ministers autumn.
The budget bill still has a long way to go and however much Berlusconi would like to cut taxes, it is economic realities that will dictate whether he can. In addition, the uncertainty of the costs of devolution has provoked worries among the parties and the regional governments. Legal specialists are terrified that the reform will complicate the division of responsibility between central government and the regions so much that nothing will get done. The magistrates are also worried that their independence is threatened by the reform, and it is not only the centre-left that is concerned at the prospect of a new, powerful prime minister. There is still a great deal of debate and a referendum before the bill is secure.
Finally, the situation in Iraq changes from day to day Poland has now set 2005 as a date for the withdrawal of its forces; the lead-up to the Iraqi elections in January, if indeed they are ever held, will certainly not ease violence. The results of the elections in the United States will also change the tactics on the ground.
All in all, the view from the top is not so certain.