Italy's general election looked late last night like a draw. At that point, it seemed that the centre-left coalition led by Romano Prodi will win the national assembly and the centre-right one led by Silvio Berlusconi the senate. If confirmed, this is a disastrous result after an ineffective five years of government presided over by Mr Berlusconi. Italy badly needs a stable government capable of carrying out economic and social reforms. It faces deep structural problems of economic competitiveness and an increasingly divided society. With no clear winner, it looks as if the country will have to go to the polls again.
Italy's houses of parliament duplicate each other's functions and a government needs the support of both to take office and pass laws. A new system adopted last year applied a different counting mechanism for the two chambers, with the lower house elected on a national and the senate on a region-by-region basis. This result shows the political calculations built into this redesign by Mr Berlusconi have paid off in the last-minute circumstances of this tempestuously-contested campaign. A great deal is at issue in such a close result.
Mr Berlusconi disappointed many Italians by not delivering on his promises of reform since 2001. He antagonised others by his systematic use of power to protect his own interests and by his coarse conduct of this campaign. Nevertheless one of his main accomplishments was to stay in office for a full term, the first prime minister to do so since the war. The last thing Italy needs is a return to the post-war pattern of short term administrations in which power was wielded by unaccountable technocrats - albeit in the framework of a basic continuity of Christian Democrat policy. Strong economic growth underlay that system, in stark contrast to realities today. This result risks Italian politics becoming unstable once again when a stagnant economy needs firm governing.
Italy is the weakest large economy in the EU. It is growing more slowly than France or Germany, has a rising public indebtedness of 106 per cent and a budget deficit of four per cent which puts it well outside the euro area's fiscal ceiling. It has traditionally been especially strong in small- and medium-sized businesses, with a real competitive edge in textiles, footwear, machine tools and white goods. Precisely these sectors are under pressure now from China and India. The economy under-performs in services, productivity, high technology and international investment and over the last five years has made little progress in opening up to greater international competition.
The Prodi coalition wants to tackle economic problems by shifting taxation from labour to capital, cutting public spending, raising revenues by tackling corruption, and introducing a balanced flexibility to the labour market. More active social policies would compensate for the impact of these measures. These are medium to long term goals, requiring an enduring consensus to implement them. Mr Prodi deserves to have this opportunity.