On May 30, the day before the Rubygate trial resumed, Berlusconi's right-wing coalition suffered a humiliating defeat when it lost control of Milan. But this wasn't the same Milan in which the tycoon had risen to national prominence a quarter of a century earlier. The mid-1980s stomping ground of Berlusconi and Craxi, Milano da bere (drinking Milan), was a boomtown, one long party fueled by endless cash, cocktails and cocaine: the design and finance capital, dressed in Arrnani prêt-à-porter, the city of yuppies and their spoiled teenage precursors, i paninari. By the late 2000s the party was over. Lots of Milanesi still bought cocaine. but most couldn't afford it and it was just chopped-up speed and novocaine, anyway. Rampant consumerism had given way to the city's traditional bourgeois provincialism, and it seemed a grayer, more mean-spirited place.
Milan's substantial conservative constituency, confronted by emerging social and economic problems, looked around for scapegoats. Non-European immigrants, mostly clandestine, were obvious targets. In 2009, Matteo Salvini, a local MP from the Northern League - one of Berlusconi's coalition partners - suggested immigrants should have to use separate carriages on Milan's metro system. He later said it was a joke. The kind of joke Mussolini would have made.
Milan's council, ostensibly led by the high-society figure Mayor Letizia Moratti was in practice ruled by her reactionary deputy, Riccardo De Corato. He seemed more concerned with closing down left-wing social centers than establishing Milan's reputation as a progressive first-tier European city. By 2011, the petty vindictiveness of the Milan administration proved too much even for mainstream conservative voters, and a left-wing lawyer, Giuliano Pisapia, was elected mayor, even after Berlusconi's PDL had conducted one of the dirtiest election campaigns in recent memory.
Berlusconi still regarded Milan, Italy's business capital, as his home turf. He was so determined not to cede the city to the left that he took personal charge of the campaign to have Moratti reelected. But Berlusconi's involvement backfired in the first major electoral test since he was charged with a sex offense and abuse of office after the Rubygate investigation.
But the loss could not be attributed entirely to the prime minister's Iegal troubles: the center-right seems to have repelled voters with its squalid campaigning, in which "left-wing" judges were compared to Red Brigade terrorists. Berlusconi himself warned that Milan would become "zingaropoli" (gypsyville) if his opponents won, while his Northern League supporters warned that mosques would spring up on every street corner. To some extent Berlusconi had always played the race card, with vote-catching anti-immigration policies, including a spiteful and pointless piece of legislation that made clandestine immigration a criminal offense. But now the failure of this tried-and-tested strategy seemed like another bad omen.
Berlusconi's support in parliament was crumbling, too. Gianfranco Fini, the head of the old post-fascist National Alliance (which had merged with Berlusconi's Forza Italia soon after the 2008 election to form the People of Freedom party), was already semi-divorced from government. In November 2010, Fini, who'd undergone a remarkable political transformation from "post-fascist" to presentable center-right politician, called on Berlusconi to quit, in the face of the mounting Rubygate scandal. Of course, 'quit" is a four-letter word in Berlusconi's vocabulary. His press and media cronies turned on Fini, who had attempted to take over the reins of the center-right. Fini soon found himself embroiled in a petty scandal, in which he was accused of selling an apartment owned by his former political party to his brother-in-law below the market price. If Berlusconi had done something this inconsequential, the opposition papers wouldn't have bothered to write about it.
But the Italian public itself gave the mogul a bloody nose in june 2011, when activists collected the half million signatures required to force referendums on key pieces of Berlusconi legislation. One of these was the legitimate impediment law, which allowed the prime minister to avoid trial hearings. The Constitutional Court had already watered the new law down. The electorate killed it completely.
With his political strength fading, Berlusconi was in no position to face the financial hurricane about to engulf the continent. The crisis that would ultimately sink the prime minister can he traced back to white-collar crooks on the other side of the Atlantic. These villains gave huge US financial institutions terminal indigestion by feeding them toxic debt. They were aided and abetted by their accomplices in the ratings agencies who covered it up - until it was too late. Some smug Europeans might have kidded themselves that the effects of the sub-prime financial disaster would be confined to America. But by 2008 there were no longer any real boundaries in global finance: after US taxpayers had footed the emergency repair bill in America, speculators turned their attention to the Old Continent, in their endless quest for the next weak link.
Earlier in the decade, with the world economy booming, investors were prepared to give the Eurozone's weaker members the benefit of the doubt; yoked into a single currency, they were now seen as part of the continent's economic powerhouse, Germany. But with the world on the brink of depression, thanks to events in the US, moneymen took a harder look at the debt-mired economies of Portugal, Ireland, Italy, Greece and Spain, the "PIIGS," and they didn't like what they saw.
With a recession biting, the PIIGS of the Eurozone would be less able to repay their huge national debts. This meant they would be charged higher interest rates on the money they needed to borrow to service the repayments - a vicious circle was under way. For the most part, Italy's banks weren't saddled with toxic debts like their desperate counterparts in Spain and Ireland. But years of political deadlock and low growth meant Italy's national debt was now approaching the €2 trillion mark.
By the summer of 2011 there was already talk that Greece might default on repayments, an event that would be disastrous for the euro. If Italy, then the world's seventh-largest economy, were to go the same way, the euro would almost certainly disintegrate and drag the global economy into a hole from which it might never escape. Once again, the world looked to Silvio Berlusconi to do the right thing. And, in Italy's greatest hour of need, he'd show that his priorities lay elsewhere.
In mid-July 2011 Ireland's credit rating was cut to junk status; Moody's ratings agency predicted the country would need more bailout aid in late 2011 on top of that already received from a special EU fund. The fund had been set up in a hurry to stop the weakest members from tumbling out of the single currency. Italy and Spain insisted their economies were secure from the debt crisis that had seen Greece and Ireland reduced to begging. No one - and certainly no speculator - believed them. Instead, the markets stepped up attacks on both countries. Borrowing costs soared despite pledges from Spanish and Italian finance ministers that they would slash debt levels.
Italy's finance minister, Giulio Tremonti, promised to cut public spending by €47 billion (then the equivalent of around $64 billion) and wipe out Italy's annual deficit by 2014, in a bid to tackle its national debt, which at 120 percent of its annual income was second only to Greece among Western nations.
By August it was clear that the markets weren't satisfied. The European Commission's president, José Manuel Barroso, declared that Spain and Italy were both in the danger zone. In a letter to all 27 members of the European Union, Barroso called for more donations to boost the Continent's bailout fund. Experts agreed the €440 billion ($600 billion) emergency pot wasn't big enough to bail out Rome - and many suspected it never would be.
Berlusconi was keeping a strangely low profile. The flow of leaked wiretaps continued to undermine what little credibility he had left. In mid-September details of his conversations with the seedy Bari businessman Giampaolo Tarantini were splashed in the newspapers. Tarantini, a convicted cocaine dealer, had supplied starlets and hookers for dozens of the mogul's parties. At first, magistrates suspected the drug-dealing pimp had attempted to blackmail the prime minister. Subsequently, their inquiries would focus on the suspicion that Berlusconi had, in fact, bribed Tarantini to lie about the prostitute ring in which they were both involved. The recorded conversations, however, shed considerable light on the prime minister's sexual delusions and the slight regard in which he held his high office. In one conversation the media mogul couldn't resist telling - or attempting to convince - 36-year-old Tarantini of his prowess at a party the previous night: "I had a queue outside my door, there were 11 of them. I only managed to do eight of them, I couldn't manage any more. You just can't get round to all of them. But this morning I feel great, I'm pleased with my stamina."
And, demonstrating his priorities, as if we didn't know them already, the mogul was heard in another conversation saying he was only prime minister in his "spare time." His primary interest was to "pass the days with my babes." No doubt he dismissed the comments as jokes. But the joke was on Italy. Even the prime minister's center-right allies were backing off quickly. It was becoming embarrassing to be associated with him. In late 2011, political chaos meant market uncertainty and the arrival of financial ruin that much faster. The country was like a train with no brakes hurtling toward disaster.
On September 29 came the revelation that fatally undermined the prime minister's authority. The European Central Bank (ECB), the continent's equivalent of the US Federal Reserve, issued Berlusconi an uncompromising diktat. Euro-officials wanted further political and economic reforms or they would refuse to prop up Italian government bonds - a last-ditch means to reduce Italy's spiraling borrowing costs. Berlusconi had surrendered Italy's sovereignty to unelected European officials. The ECB's demands, particularly on opening up labor markets, were largely to blame for the crippling national strikes that were subsequently called by Italy's militant left-wing public sector union, the CGIL.
The chaos mounted, even as the mogul tried to celebrate his seventy-fifth birthday on September 29 at Arcore. But there was no respite anywhere, As Berlusconi clocked up three-quarters of a century, he had hoped for a quiet family celebration. Instead, he had to face allegations of more sexual shenanigans. A 20-year-old Montenegrin beauty queen, Katarina Knezevic appeared in the papers to announce that she had been Berlusconi's live-in lover for the past two years: she claimed they'd met three days after her eighteenth birthday. She didn't say whether she'd been bothered by the competition passing through Villa San Martino's revolving door, but she did deny claims that she had attempted to blackmail him.
Before his birthday the mogul had said the best present he could hope for that year was to see an end to political bickering and to see people 'work together to re-launch the economy." Perhaps Knezevic considered herself in with a shot for finance minister.
Everyone knew that Berlusconi's lame-duck administration, weakened by almost daily defections, was adding to the market's jitters. In mid-October, Berlusconi scraped through a parliamentary confidence vote, but the margin of victory served only to highlight the fragility of his right-wing coalition. La Stampa newspaper poured scorn on his pre-vote pep talk to parliamentary allies. "Not one new thought was expressed. Absolutely nothing. A complete vacuum. Berlusconi has by now become a factor that is immobilizing and freezing Italian politics," it said.
The barely concealed animosity between the prime minister and Finance Minister Tremonti was adding to investors' fears. Earlier in the month it was widely reported that Tremonti had told Berlusconi, "Silvio, don't you understand? You're the problem," when the premier asked how his government might beat the speculators. The money markets looked at the colossal €400 million ($530 million) debt that Italy had to refinance in the next twelve months. And responded by raising borrowing costs within sight of the levels that had forced Greece and Ireland to seek bailouts. But Italy was too big to bail out. The country was heading for bankruptcy, with no rescue in sight.
On November 4, the prime minister's political humiliation was almost complete when it was reported that inspectors from the International Monetary Fund (IMF) were being sent in to police the promised reforms and spending cuts. World powers led by Germany, France and the US had effectively imposed IMF checks on Italy to stop it from going the way of Greece.
Franco Pavoncello, a political science professor at Rome's John Cabot University, correctly predicted that, thanks to the news leak about the ECB's intervention, the mogul's time in office was about to run out. "Until now, everyone's been asking whether it's a good thing to get rid of Berlusconi in the middle of this financial crisis, even though he's a liability," he said. 'Italy is effectively coming under outside control. That's why rebels now feel they can leave Berlusconi's PDL party . . . the government might only last a matter of days." Italy's supposedly neutral head of state, President Giorgio Napolitano, warned that Italy was facing an "unprecedented crisis." Before long we learned that rather than playing the part of referee, he had done everything he could to show Berlusconi the door.
On November 8, 201 1, Berlusconi finally bowed to the inevitable and announced he was stepping down. With the lack of good grace we'd come to expect, he had earlier stormed out of parliament after failing to win over rebel MPs. The eight parliamentarians who refused to support him were labeled "traitors" in a scribbled note captured on camera. Once it was clear his parliamentary majority had vanished, the prime minister and the president met for 45 minutes. Soon after, the increasingly hands-on head of state announced that Berlusconi would be quitting in a matter of weeks - once he had passed key economic reforms demanded by the EU.
The prime minister's mawkish side was on show later that evening when he lamented the actions of the MPs who'd rebelled. "I felt not only surprise but also sadness, because the people who didn't vote for me were people with whom I've been close for years, from the start of Forza Italia [his first political party]." Most observers, however, saw rats fleeing a sinking ship.
Italy and the rest of Europe prayed that the prime minister's eleventh hour forced exit would be enough to restore confidence and prevent a meltdown.
Despite the gravity of Italy's situation, the mogul's longest meeting in the previous 48 hours had not been with the president, the finance minister, or his economic advisers, but with his oldest children, Marina and Pier Silvio, key lieutenants in his business empire, and Fedele Confalonieri, chairman of his Mediaset TV company. "This is a good example of Berlusconi's priorities. The euro is at risk through Italian inaction, but the Italian prime minister is looking after family interests," said James Walston, a respected politics professor at the American University in Rome.
When Berlusconi told President Napolitano that he would quit in just weeks or days to halt the disastrous downward slide of Italy's stock market, the irony of the situation probably wasn't lost on him. The tycoon had entered politics 17 years earlier, in part to save his business interests from left-wing politicians who wanted to dismantle them. Now he was about to quit office in order to save his business interests, only this time it was the markets that threatened his media empire.
In the midst of the sovereign debt crisis, with the speculators singling out Italy, it was Berlusconi's Mediaset that felt the full force of their attack. The company had already lost 20 percent of its value in five days, but on November 8 the fall accelerated. It was reported that Confalonieri, the Mediaset chairman and the mogul's oldest and closest friend, had told his boss at their meeting a day earlier that the game for him as prime minister was up - and that by failing to step down immediately he risked seeing his business empire fall with him.
"He clearly told Mr. Berlusconi: "Quit now or you'll bring the company down,"' said Alessandro Baj Badino, the Italian media analyst of Deutsche Bank. Remarks later that month by Berlusconi's eldest son, Pier Silvio, seemed to confirm this. Berlusconi junior, Mediaset's vice president, spoke candidly about what he saw as the "climate of hostility" surrounding Mediaset because of its links to the prime minister, hostility that his father was "well aware" of.
Berlusconi's other motive when he first ran for high office in 1994 had been to avoid prison. By quitting now he would make himself more vulnerable to prosecutors attempting to nail him in three criminal cases. He was facing around three dozen trial hearings in the coming six months. Friend and foe alike knew it was dangerous to write off Silvio Berlusconi. But deep down, even he must have known the end game had moved a step closer.
Chapter 13: Blame the Germans
On November 16, 2011, intrigued Italians awoke to find themselves governed by a caretaker cabinet of highly qualified academics and lawyers, rather than Berlusconi's gang of sycophants, suspects/convicts, dolly birds and right-wing rabble-rousers. There hadn't even been an election. Was it a coup? Sort of. The impetus for this remarkable change was the euro-debt crisis. But the architect of the transition, which had seen the prime minister's office swap libidinous businessman Berlusconi for Euro-egghead Mario Monti, was the head of state, President Giorgio Napolitano. As the details of events gradually filtered out, Napolitano was shown to be less of a figurehead who simply rubber-stamped legislation and more of a wily and determined power broker.
The foreign press - particularly the US papers - always refers to Napolitano as an "ex-communist," as if this far-left political association forever defines him. America's former chief diplomat Henry Kissinger even labeled Napolitano "my favorite communist," which isn't saying much given that the man who carpet bombed half of Southeast Asia was also pals with Mao Zedong and Leonid Brezhnev.
A closer look at Napolitano's long career, however, reveals a politician with a remarkable ability to adapt to, and even embrace, the prevailing political conditions. When appointed interior minister in Romano Prodi's center-left government in 1996, he was, in theory at least, Italy't first true left-winger to run this key ministry. He showed strangely little interest, though, in shedding light on the backlog of unsolved murders and bomb atrocities from preceding decades, linked to shadowy right-wing paramilitaries. He even assured interior ministry staff he would "not go looking for skeletons." This Machiavellian flexibility meant Berlusconi had no problem backing Napolitano's election as head of state in 2006. Napolitano had given up far-left politics decades earlier, and he was never that far left to begin with.
In style and tone Berlusconi and Napolitano are a universe apart: Berlusconi, the real-estate salesman of politics; Napolitano, all calculated sobriety. They did have something in common, however. Both were on good terms with the disgraced former prime minister Bettino Craxi. Although Berlusconi's links were stronger, from the mid-1980s Napolitano and his allies had also made overtures to the champagne socialist. In January 2010, ten years after Craxi's death in exile, Napolitano joined Berlusconi and the rest of Milan's political establishment in celebrating the corrupt ex-prime minister's life and career.
Although few were in any doubt that Napolitano looked discreetly down his long nose at Berlusconi, the president showed little reluctance in signing off on some of the mogul's most controversial legislation, This included the attempts to make the holders of the four highest state offices (which included the posts of prime minister and president) immune to prosecution, and the subsequent "legitimate impediment" law that allowed ministers to skip court hearings - despite the glaring evidence that these legal ruses were self-serving and unconstitutional. The president was even criticized by his predecessor, Carlo Azeglio Ciampi, for the alacrity with which he'd allowed these laws into the statute book. Napolitano might not have thought much of Berlusconi, but the mogul had been elected head of government, and the head of state preferred not to disrupt the status quo.
But things had changed radically by the summer of 2011. The Euro-debt crisis was escalating fast, and Berlusconi's dead-duck government looked set to drift on perilously, possibly into the spring, It seems at this point Napolitano decided the status quo that needed his discreet support was not Italy's parliamentary democracy but the European Union and its ill-conceived, and increasingly precarious, single currency, the euro. The Italian president already had something of a reputation as an effective behind-the-scenes player. He was now being flattered and cajoled by the European Commission and the European powers in France and Germany to create a road map for Berlusconi's exit. His first task was choosing a successor to Berlusconi, The obvious candidate was Mario Monti, who had not been shy about speaking out about Italy's economic and political woes, and the drastic action that was needed to deal with them. Monti had appeared to be putting himself forward for the top job when he penned a series of manifesto-type articles in Corriere della Sera, setting out his action plan for the country. Napolitano saw Monti, a former European Commissioner for competition and one of Europe's great and good, as a safe pair of hands. By July he was already sounding Monti out for the top job, according to interviews with Monti, printed by journalist Alan Friedman in his 2014 book Ammazziamo il Gattopardo (Let's Kill the Leopard). Around the same time Napolitano also commissioned prominent banker Corrado Passera to produce an emergency economic program to rescue Italy. Passera came up with 196 pages of tough medicine: €100 billion ($130 billion) of state privatization and tax hikes. In October, with the Euro-debt crisis worsening on a daily basis, German chancellor Angela Merkel was on the phone to Napolitano, Italy's supposedly neutral head of state, seeking his help to *nudge Berlusconi off the stage."
Goaded on by Europe's most powerful figures, Napolitano now had the bit between his teeth. On November 9, in a smart move that simultaneously announced his intentions and rendered them virtually unstoppable, he plucked Monti from his then role as president of Milan's Bocconi business school and made him a senator. With the markets preparing for their final assault on ltaly - and with the growing expectation that Monti's appointment as prime minister would be the country's last chance at salvation - Berlusconi agreed on November 8 that he would quit, his decision made inevitable by the final, fateful parliamentary defections. Within a week Napolitano swore in neo-prime minister Mario Monti, who began assembling the unelected cabinet of businessmen and academics who would govern the country for the 18 months until the next general election.
Berlusconi and his supporters were outraged when allegations of Napolitano's possibly unconstitutional machinations emerged. One of Berlusconi's MPs, Melania De Nichilo Rizzoli, said: "'We are not a German colony. The European treaties do not allow the interference of one state in the political affairs of another European state." These events also forged Berlusconi's animosity toward Berlin, which continues to this day.
In the final weeks of 2011, having hard-nosed hankers in charge of Italy calmed the markets and averted the immediate crisis. But the complete abrogation of the democratic process left a nasty taste in the mouth.
The 2004 heroics of "Super Mario" Monti, who fined Microsoft a record €497 million ($620 million) during his time as Europe's competition commissioner, were soon forgotten. Instead, left-wing conspiracy theorists looked at Monti's links to Goldman Sachs (the "Vampire Squid" that had been mired in the scandal of the falsification of Greece's public accounts that enabled it to join the euro) and had a field day. But to be fair, most Italians I spoke to simply shrugged their shoulders. What choice had there been? Arrange Berlusconi's exit by fair means or foul - or see the euro and the global economy fall off a cliff? Napolitano sought to play down the extent of his involvement in events and denied he'd acted improperly. But he could probably argue, too, that the end justified the means.
Being Berlusconi: The Rise & Fall from Cosa Nostra to Bunga Bunga - Michael Day (Nero; 2015; pp.161-172)
Milan's substantial conservative constituency, confronted by emerging social and economic problems, looked around for scapegoats. Non-European immigrants, mostly clandestine, were obvious targets. In 2009, Matteo Salvini, a local MP from the Northern League - one of Berlusconi's coalition partners - suggested immigrants should have to use separate carriages on Milan's metro system. He later said it was a joke. The kind of joke Mussolini would have made.
Milan's council, ostensibly led by the high-society figure Mayor Letizia Moratti was in practice ruled by her reactionary deputy, Riccardo De Corato. He seemed more concerned with closing down left-wing social centers than establishing Milan's reputation as a progressive first-tier European city. By 2011, the petty vindictiveness of the Milan administration proved too much even for mainstream conservative voters, and a left-wing lawyer, Giuliano Pisapia, was elected mayor, even after Berlusconi's PDL had conducted one of the dirtiest election campaigns in recent memory.
Berlusconi still regarded Milan, Italy's business capital, as his home turf. He was so determined not to cede the city to the left that he took personal charge of the campaign to have Moratti reelected. But Berlusconi's involvement backfired in the first major electoral test since he was charged with a sex offense and abuse of office after the Rubygate investigation.
But the loss could not be attributed entirely to the prime minister's Iegal troubles: the center-right seems to have repelled voters with its squalid campaigning, in which "left-wing" judges were compared to Red Brigade terrorists. Berlusconi himself warned that Milan would become "zingaropoli" (gypsyville) if his opponents won, while his Northern League supporters warned that mosques would spring up on every street corner. To some extent Berlusconi had always played the race card, with vote-catching anti-immigration policies, including a spiteful and pointless piece of legislation that made clandestine immigration a criminal offense. But now the failure of this tried-and-tested strategy seemed like another bad omen.
Berlusconi's support in parliament was crumbling, too. Gianfranco Fini, the head of the old post-fascist National Alliance (which had merged with Berlusconi's Forza Italia soon after the 2008 election to form the People of Freedom party), was already semi-divorced from government. In November 2010, Fini, who'd undergone a remarkable political transformation from "post-fascist" to presentable center-right politician, called on Berlusconi to quit, in the face of the mounting Rubygate scandal. Of course, 'quit" is a four-letter word in Berlusconi's vocabulary. His press and media cronies turned on Fini, who had attempted to take over the reins of the center-right. Fini soon found himself embroiled in a petty scandal, in which he was accused of selling an apartment owned by his former political party to his brother-in-law below the market price. If Berlusconi had done something this inconsequential, the opposition papers wouldn't have bothered to write about it.
But the Italian public itself gave the mogul a bloody nose in june 2011, when activists collected the half million signatures required to force referendums on key pieces of Berlusconi legislation. One of these was the legitimate impediment law, which allowed the prime minister to avoid trial hearings. The Constitutional Court had already watered the new law down. The electorate killed it completely.
With his political strength fading, Berlusconi was in no position to face the financial hurricane about to engulf the continent. The crisis that would ultimately sink the prime minister can he traced back to white-collar crooks on the other side of the Atlantic. These villains gave huge US financial institutions terminal indigestion by feeding them toxic debt. They were aided and abetted by their accomplices in the ratings agencies who covered it up - until it was too late. Some smug Europeans might have kidded themselves that the effects of the sub-prime financial disaster would be confined to America. But by 2008 there were no longer any real boundaries in global finance: after US taxpayers had footed the emergency repair bill in America, speculators turned their attention to the Old Continent, in their endless quest for the next weak link.
Earlier in the decade, with the world economy booming, investors were prepared to give the Eurozone's weaker members the benefit of the doubt; yoked into a single currency, they were now seen as part of the continent's economic powerhouse, Germany. But with the world on the brink of depression, thanks to events in the US, moneymen took a harder look at the debt-mired economies of Portugal, Ireland, Italy, Greece and Spain, the "PIIGS," and they didn't like what they saw.
With a recession biting, the PIIGS of the Eurozone would be less able to repay their huge national debts. This meant they would be charged higher interest rates on the money they needed to borrow to service the repayments - a vicious circle was under way. For the most part, Italy's banks weren't saddled with toxic debts like their desperate counterparts in Spain and Ireland. But years of political deadlock and low growth meant Italy's national debt was now approaching the €2 trillion mark.
By the summer of 2011 there was already talk that Greece might default on repayments, an event that would be disastrous for the euro. If Italy, then the world's seventh-largest economy, were to go the same way, the euro would almost certainly disintegrate and drag the global economy into a hole from which it might never escape. Once again, the world looked to Silvio Berlusconi to do the right thing. And, in Italy's greatest hour of need, he'd show that his priorities lay elsewhere.
In mid-July 2011 Ireland's credit rating was cut to junk status; Moody's ratings agency predicted the country would need more bailout aid in late 2011 on top of that already received from a special EU fund. The fund had been set up in a hurry to stop the weakest members from tumbling out of the single currency. Italy and Spain insisted their economies were secure from the debt crisis that had seen Greece and Ireland reduced to begging. No one - and certainly no speculator - believed them. Instead, the markets stepped up attacks on both countries. Borrowing costs soared despite pledges from Spanish and Italian finance ministers that they would slash debt levels.
Italy's finance minister, Giulio Tremonti, promised to cut public spending by €47 billion (then the equivalent of around $64 billion) and wipe out Italy's annual deficit by 2014, in a bid to tackle its national debt, which at 120 percent of its annual income was second only to Greece among Western nations.
By August it was clear that the markets weren't satisfied. The European Commission's president, José Manuel Barroso, declared that Spain and Italy were both in the danger zone. In a letter to all 27 members of the European Union, Barroso called for more donations to boost the Continent's bailout fund. Experts agreed the €440 billion ($600 billion) emergency pot wasn't big enough to bail out Rome - and many suspected it never would be.
Berlusconi was keeping a strangely low profile. The flow of leaked wiretaps continued to undermine what little credibility he had left. In mid-September details of his conversations with the seedy Bari businessman Giampaolo Tarantini were splashed in the newspapers. Tarantini, a convicted cocaine dealer, had supplied starlets and hookers for dozens of the mogul's parties. At first, magistrates suspected the drug-dealing pimp had attempted to blackmail the prime minister. Subsequently, their inquiries would focus on the suspicion that Berlusconi had, in fact, bribed Tarantini to lie about the prostitute ring in which they were both involved. The recorded conversations, however, shed considerable light on the prime minister's sexual delusions and the slight regard in which he held his high office. In one conversation the media mogul couldn't resist telling - or attempting to convince - 36-year-old Tarantini of his prowess at a party the previous night: "I had a queue outside my door, there were 11 of them. I only managed to do eight of them, I couldn't manage any more. You just can't get round to all of them. But this morning I feel great, I'm pleased with my stamina."
And, demonstrating his priorities, as if we didn't know them already, the mogul was heard in another conversation saying he was only prime minister in his "spare time." His primary interest was to "pass the days with my babes." No doubt he dismissed the comments as jokes. But the joke was on Italy. Even the prime minister's center-right allies were backing off quickly. It was becoming embarrassing to be associated with him. In late 2011, political chaos meant market uncertainty and the arrival of financial ruin that much faster. The country was like a train with no brakes hurtling toward disaster.
On September 29 came the revelation that fatally undermined the prime minister's authority. The European Central Bank (ECB), the continent's equivalent of the US Federal Reserve, issued Berlusconi an uncompromising diktat. Euro-officials wanted further political and economic reforms or they would refuse to prop up Italian government bonds - a last-ditch means to reduce Italy's spiraling borrowing costs. Berlusconi had surrendered Italy's sovereignty to unelected European officials. The ECB's demands, particularly on opening up labor markets, were largely to blame for the crippling national strikes that were subsequently called by Italy's militant left-wing public sector union, the CGIL.
The chaos mounted, even as the mogul tried to celebrate his seventy-fifth birthday on September 29 at Arcore. But there was no respite anywhere, As Berlusconi clocked up three-quarters of a century, he had hoped for a quiet family celebration. Instead, he had to face allegations of more sexual shenanigans. A 20-year-old Montenegrin beauty queen, Katarina Knezevic appeared in the papers to announce that she had been Berlusconi's live-in lover for the past two years: she claimed they'd met three days after her eighteenth birthday. She didn't say whether she'd been bothered by the competition passing through Villa San Martino's revolving door, but she did deny claims that she had attempted to blackmail him.
Before his birthday the mogul had said the best present he could hope for that year was to see an end to political bickering and to see people 'work together to re-launch the economy." Perhaps Knezevic considered herself in with a shot for finance minister.
Everyone knew that Berlusconi's lame-duck administration, weakened by almost daily defections, was adding to the market's jitters. In mid-October, Berlusconi scraped through a parliamentary confidence vote, but the margin of victory served only to highlight the fragility of his right-wing coalition. La Stampa newspaper poured scorn on his pre-vote pep talk to parliamentary allies. "Not one new thought was expressed. Absolutely nothing. A complete vacuum. Berlusconi has by now become a factor that is immobilizing and freezing Italian politics," it said.
The barely concealed animosity between the prime minister and Finance Minister Tremonti was adding to investors' fears. Earlier in the month it was widely reported that Tremonti had told Berlusconi, "Silvio, don't you understand? You're the problem," when the premier asked how his government might beat the speculators. The money markets looked at the colossal €400 million ($530 million) debt that Italy had to refinance in the next twelve months. And responded by raising borrowing costs within sight of the levels that had forced Greece and Ireland to seek bailouts. But Italy was too big to bail out. The country was heading for bankruptcy, with no rescue in sight.
On November 4, the prime minister's political humiliation was almost complete when it was reported that inspectors from the International Monetary Fund (IMF) were being sent in to police the promised reforms and spending cuts. World powers led by Germany, France and the US had effectively imposed IMF checks on Italy to stop it from going the way of Greece.
Franco Pavoncello, a political science professor at Rome's John Cabot University, correctly predicted that, thanks to the news leak about the ECB's intervention, the mogul's time in office was about to run out. "Until now, everyone's been asking whether it's a good thing to get rid of Berlusconi in the middle of this financial crisis, even though he's a liability," he said. 'Italy is effectively coming under outside control. That's why rebels now feel they can leave Berlusconi's PDL party . . . the government might only last a matter of days." Italy's supposedly neutral head of state, President Giorgio Napolitano, warned that Italy was facing an "unprecedented crisis." Before long we learned that rather than playing the part of referee, he had done everything he could to show Berlusconi the door.
On November 8, 201 1, Berlusconi finally bowed to the inevitable and announced he was stepping down. With the lack of good grace we'd come to expect, he had earlier stormed out of parliament after failing to win over rebel MPs. The eight parliamentarians who refused to support him were labeled "traitors" in a scribbled note captured on camera. Once it was clear his parliamentary majority had vanished, the prime minister and the president met for 45 minutes. Soon after, the increasingly hands-on head of state announced that Berlusconi would be quitting in a matter of weeks - once he had passed key economic reforms demanded by the EU.
The prime minister's mawkish side was on show later that evening when he lamented the actions of the MPs who'd rebelled. "I felt not only surprise but also sadness, because the people who didn't vote for me were people with whom I've been close for years, from the start of Forza Italia [his first political party]." Most observers, however, saw rats fleeing a sinking ship.
Italy and the rest of Europe prayed that the prime minister's eleventh hour forced exit would be enough to restore confidence and prevent a meltdown.
Despite the gravity of Italy's situation, the mogul's longest meeting in the previous 48 hours had not been with the president, the finance minister, or his economic advisers, but with his oldest children, Marina and Pier Silvio, key lieutenants in his business empire, and Fedele Confalonieri, chairman of his Mediaset TV company. "This is a good example of Berlusconi's priorities. The euro is at risk through Italian inaction, but the Italian prime minister is looking after family interests," said James Walston, a respected politics professor at the American University in Rome.
When Berlusconi told President Napolitano that he would quit in just weeks or days to halt the disastrous downward slide of Italy's stock market, the irony of the situation probably wasn't lost on him. The tycoon had entered politics 17 years earlier, in part to save his business interests from left-wing politicians who wanted to dismantle them. Now he was about to quit office in order to save his business interests, only this time it was the markets that threatened his media empire.
In the midst of the sovereign debt crisis, with the speculators singling out Italy, it was Berlusconi's Mediaset that felt the full force of their attack. The company had already lost 20 percent of its value in five days, but on November 8 the fall accelerated. It was reported that Confalonieri, the Mediaset chairman and the mogul's oldest and closest friend, had told his boss at their meeting a day earlier that the game for him as prime minister was up - and that by failing to step down immediately he risked seeing his business empire fall with him.
"He clearly told Mr. Berlusconi: "Quit now or you'll bring the company down,"' said Alessandro Baj Badino, the Italian media analyst of Deutsche Bank. Remarks later that month by Berlusconi's eldest son, Pier Silvio, seemed to confirm this. Berlusconi junior, Mediaset's vice president, spoke candidly about what he saw as the "climate of hostility" surrounding Mediaset because of its links to the prime minister, hostility that his father was "well aware" of.
Berlusconi's other motive when he first ran for high office in 1994 had been to avoid prison. By quitting now he would make himself more vulnerable to prosecutors attempting to nail him in three criminal cases. He was facing around three dozen trial hearings in the coming six months. Friend and foe alike knew it was dangerous to write off Silvio Berlusconi. But deep down, even he must have known the end game had moved a step closer.
Chapter 13: Blame the Germans
On November 16, 2011, intrigued Italians awoke to find themselves governed by a caretaker cabinet of highly qualified academics and lawyers, rather than Berlusconi's gang of sycophants, suspects/convicts, dolly birds and right-wing rabble-rousers. There hadn't even been an election. Was it a coup? Sort of. The impetus for this remarkable change was the euro-debt crisis. But the architect of the transition, which had seen the prime minister's office swap libidinous businessman Berlusconi for Euro-egghead Mario Monti, was the head of state, President Giorgio Napolitano. As the details of events gradually filtered out, Napolitano was shown to be less of a figurehead who simply rubber-stamped legislation and more of a wily and determined power broker.
The foreign press - particularly the US papers - always refers to Napolitano as an "ex-communist," as if this far-left political association forever defines him. America's former chief diplomat Henry Kissinger even labeled Napolitano "my favorite communist," which isn't saying much given that the man who carpet bombed half of Southeast Asia was also pals with Mao Zedong and Leonid Brezhnev.
A closer look at Napolitano's long career, however, reveals a politician with a remarkable ability to adapt to, and even embrace, the prevailing political conditions. When appointed interior minister in Romano Prodi's center-left government in 1996, he was, in theory at least, Italy't first true left-winger to run this key ministry. He showed strangely little interest, though, in shedding light on the backlog of unsolved murders and bomb atrocities from preceding decades, linked to shadowy right-wing paramilitaries. He even assured interior ministry staff he would "not go looking for skeletons." This Machiavellian flexibility meant Berlusconi had no problem backing Napolitano's election as head of state in 2006. Napolitano had given up far-left politics decades earlier, and he was never that far left to begin with.
In style and tone Berlusconi and Napolitano are a universe apart: Berlusconi, the real-estate salesman of politics; Napolitano, all calculated sobriety. They did have something in common, however. Both were on good terms with the disgraced former prime minister Bettino Craxi. Although Berlusconi's links were stronger, from the mid-1980s Napolitano and his allies had also made overtures to the champagne socialist. In January 2010, ten years after Craxi's death in exile, Napolitano joined Berlusconi and the rest of Milan's political establishment in celebrating the corrupt ex-prime minister's life and career.
Although few were in any doubt that Napolitano looked discreetly down his long nose at Berlusconi, the president showed little reluctance in signing off on some of the mogul's most controversial legislation, This included the attempts to make the holders of the four highest state offices (which included the posts of prime minister and president) immune to prosecution, and the subsequent "legitimate impediment" law that allowed ministers to skip court hearings - despite the glaring evidence that these legal ruses were self-serving and unconstitutional. The president was even criticized by his predecessor, Carlo Azeglio Ciampi, for the alacrity with which he'd allowed these laws into the statute book. Napolitano might not have thought much of Berlusconi, but the mogul had been elected head of government, and the head of state preferred not to disrupt the status quo.
But things had changed radically by the summer of 2011. The Euro-debt crisis was escalating fast, and Berlusconi's dead-duck government looked set to drift on perilously, possibly into the spring, It seems at this point Napolitano decided the status quo that needed his discreet support was not Italy's parliamentary democracy but the European Union and its ill-conceived, and increasingly precarious, single currency, the euro. The Italian president already had something of a reputation as an effective behind-the-scenes player. He was now being flattered and cajoled by the European Commission and the European powers in France and Germany to create a road map for Berlusconi's exit. His first task was choosing a successor to Berlusconi, The obvious candidate was Mario Monti, who had not been shy about speaking out about Italy's economic and political woes, and the drastic action that was needed to deal with them. Monti had appeared to be putting himself forward for the top job when he penned a series of manifesto-type articles in Corriere della Sera, setting out his action plan for the country. Napolitano saw Monti, a former European Commissioner for competition and one of Europe's great and good, as a safe pair of hands. By July he was already sounding Monti out for the top job, according to interviews with Monti, printed by journalist Alan Friedman in his 2014 book Ammazziamo il Gattopardo (Let's Kill the Leopard). Around the same time Napolitano also commissioned prominent banker Corrado Passera to produce an emergency economic program to rescue Italy. Passera came up with 196 pages of tough medicine: €100 billion ($130 billion) of state privatization and tax hikes. In October, with the Euro-debt crisis worsening on a daily basis, German chancellor Angela Merkel was on the phone to Napolitano, Italy's supposedly neutral head of state, seeking his help to *nudge Berlusconi off the stage."
Goaded on by Europe's most powerful figures, Napolitano now had the bit between his teeth. On November 9, in a smart move that simultaneously announced his intentions and rendered them virtually unstoppable, he plucked Monti from his then role as president of Milan's Bocconi business school and made him a senator. With the markets preparing for their final assault on ltaly - and with the growing expectation that Monti's appointment as prime minister would be the country's last chance at salvation - Berlusconi agreed on November 8 that he would quit, his decision made inevitable by the final, fateful parliamentary defections. Within a week Napolitano swore in neo-prime minister Mario Monti, who began assembling the unelected cabinet of businessmen and academics who would govern the country for the 18 months until the next general election.
Berlusconi and his supporters were outraged when allegations of Napolitano's possibly unconstitutional machinations emerged. One of Berlusconi's MPs, Melania De Nichilo Rizzoli, said: "'We are not a German colony. The European treaties do not allow the interference of one state in the political affairs of another European state." These events also forged Berlusconi's animosity toward Berlin, which continues to this day.
In the final weeks of 2011, having hard-nosed hankers in charge of Italy calmed the markets and averted the immediate crisis. But the complete abrogation of the democratic process left a nasty taste in the mouth.
The 2004 heroics of "Super Mario" Monti, who fined Microsoft a record €497 million ($620 million) during his time as Europe's competition commissioner, were soon forgotten. Instead, left-wing conspiracy theorists looked at Monti's links to Goldman Sachs (the "Vampire Squid" that had been mired in the scandal of the falsification of Greece's public accounts that enabled it to join the euro) and had a field day. But to be fair, most Italians I spoke to simply shrugged their shoulders. What choice had there been? Arrange Berlusconi's exit by fair means or foul - or see the euro and the global economy fall off a cliff? Napolitano sought to play down the extent of his involvement in events and denied he'd acted improperly. But he could probably argue, too, that the end justified the means.
Being Berlusconi: The Rise & Fall from Cosa Nostra to Bunga Bunga - Michael Day (Nero; 2015; pp.161-172)
