Italy

(Getty)

By Catherine Contiguglia

It seemed an era of Italian politics came to an end with the announcement that Italy’s supreme court had upheld a four-year sentence against Silvio Berlusconi for tax fraud.

Though the 76-year-old centre-right politician will not be going to jail due to his age, he could be placed under house arrest for a year, will not be able to hold public office for as long as five years, will not be able to run for elected office for six years and could be voted out of his current position as a senator.

Emerging from the ashes has been a major part of Berlusconi’s public career and, since the ruling, Berlusconi has assured his supporters he still has more plans up his sleeve. However, many believe this most recent ruling could be the definitive end of Berlusconi in politics. Read more

John Aglionby

The allegations against Monsignor Nunzio Scarano, an accountant in the Vatican’s internal accounting administration, are – albeit tangentially – the latest in a litany of scandals to affect the Vatican bank. Over the last three years, the 71-year-old Institute of Religious Works, as the bank is officially called, has been tainted by claims of money-laundering, corruption and incompetence.

The crisis began in September 2010 when it came under investigation by Italian authorities who had frozen €23m the bank was trying to transfer to accounts in Italy and Germany without releasing full details of the intended beneficiaries. The bank denied any wrongdoing. The funds were released but the investigation continues.

The Vatican responded with striking rapidity to the bank’s top two officials, Ettore Gotti Tedeschi and Paolo Cipriani, being placed under investigation; Father Frederico Lombardi, the chief spokesman, even wrote to the FT defending the two menRead more

Ferdinando Giugliano

Berlusconi at a rally (Getty)

Will he or won’t he? Since a court in Milan on Monday sentenced Silvio Berlusconi to seven years in prison on charges of paying for sex with an underage prostitute and abuse of office, Rome-watchers have wondered whether this ruling will have consequences for the Italian government led by Enrico Letta. Mr Berlusconi’s People of Liberty is one of the three parties backing the cabinet, alongside the centre-left Democrats and the centrist formation, Civic Choice.

Mr Letta and Mr Berlusconi met on Tuesday to discuss the road ahead for the coalition. Top of the agenda was the government’s economic policy and, in particular, how to spare Italians of a rise in VAT, which is planned for July 1st but which Mr Berlusconi wanted to avoid at all cost. It is hard to imagine, however, that in their three-hour long meeting, Mr Letta and his predecessor did not discuss the consequences of the ruling in Milan.

 Read more

Ferdinando Giugliano

Fabrizio Saccomanni

It takes a little more than 15 minutes to cover the mile-long distance that separates the Bank of Italy from the ministry of the economy and finance in central Rome. But the upper echelons of the two institutions dominating the commanding heights of Italy’s economy have traditionally been closely linked by a revolving door. Read more

Gideon Rachman

Margaret Thatcher and Giulio Andreotti – they didn't always see eye to eye

Tuesday’s FT contained a wonderful obituary of Giulio Andreotti, a man who managed to be prime minister of Italy no fewer than seven times – as well as serving as foreign minister for much of the 1980s. Yet, as the FT obituary notes, Andreotti’s life ended in semi-disgrace, with the former PM preferring to to travel to “those parts of the world where he was still treated with respect: notably Libya, Syria and Iran.”

The Andreotti story is not simply an Italian curiosity. For the former Italian PM was also a pivotal figure in the construction of Europe and in the debates that led to the formation of the European single currency. As such, he crops up quite frequently in Margaret Thatcher‘s autobiography – in ways that cast a revealing light on today’s debates and dilemmas. Read more

Prospects for a new Italian government
The political chaos in Rome seems to be about to come to an end as the bickering parties prepare to form a broad coalition government led by Enrico Letta of the centre-left Democrats. Will the coalition be able to rise to the challenges facing Italy, including an economy now entering its eighth consecutive quarter of contraction. Ferdinando Giugliano, FT leader writer, and Guy Dinmore, Rome correspondent, join Ben Hall to discuss.

Ferdinando Giugliano

Beppe Grillo on the campaign trail

Two months ago Beppe Grillo came out as the big winner of Italy’s general elections. His Five Star Movement, which was created only in 2009, came within a whisker of becoming Italy’s single largest political force. His vote tally in the Lower House was an extraordinary 8.7m, more than Silvio Berlusconi’s People of Liberty party and only a few hundred thousand votes less than the centre-left Democratic Party. Read more

Ferdinando Giugliano

An elderly man plays his accordion at the old town market in Warsaw, Poland, on June 24, 2012 (CHRISTOF STACHE/AFP/GettyImages)

(Photo by Christof Stache/AFP/Getty)

The former Italian prime minister Giuliano Amato once compared the powers of Italy’s president to an accordion. Just as the box-shaped musical instrument can expand and contract, the same is true for the influence of Italy’s head of state: what the president can or cannot do largely depends on the strength of the political parties.

On Thursday, Italy’s 949 MPs and 58 representatives from the 20 regions will convene to elect the successor to President Giorgio Napolitano. Amato himself is a candidate, alongside former prime minister Romano Prodi, former European commissioner Emma Bonino, and others.

The political stalemate following February’s inconclusive election means that the new president will have to be picked on the basis of a last-minute deal between the centre-left, (the largest alliance in Parliament) and at least one of the other three significant forces – the centre-right coalition of the People of Liberty and the Northern League, Beppe Grillo’s Five Star Movement and Mario Monti’s Civic Choice. There are no clear favourites for the job. Yet, this election will matter a great deal for Italy and for those who are interested in a solution to its political crisis.

For decades, the President’s job was seen as largely ceremonial. True, the President is the head of the judiciary and of the armed forces. But he doesn’t have anything like the kind of executive powers held by the French or American presidents (though he can veto any law if he believes it is against the constitution). Read more

Gideon Rachman

In the week of Margaret Thatcher’s funeral – and with the euro-crisis bubbling along – it is interesting to take a look back at what Thatcher had to say about the single currency. Much of the commentary since her death has portrayed Thatcher’s views on Europe as irrational and backward-looking. For example, Anne-Marie Slaughter in the FT, wrote that “her attitude to Europe was a throwback to the 19th century”. For good measure, Prof Slaughter adds that Thatcher’s views were “deeply anachronistic and dangerous”. Of course, there was a strong element of emotion in Thatcher’s views of Europe. So what? It is more interesting to note that she also made some quite precise criticisms of the European single currency that look increasingly prescient, as time wears on. Read more

Ferdinando Giugliano

The Italian dog that did not bark is one of the great untold market stories of the past month. The yield on Rome’s 10-year bonds is around 4.3 per cent, a level not seen since the end of January.

Chart: Italy’s 10-year bond yield (black line) over the past five years; blue line shows the yield on the German 10-year bund

chart courtesy of Reuters

(Chart courtesy Reuters)

The spread with the Bund, which has obsessed Italians since the market panic at the end of 2011, has narrowed to just above 300 basis points. It almost looks as if February’s inconclusive election and the accompanying political uncertainty do not matter. This is puzzling, so here are a few tentative explanations:

1) Mario Draghi’s magic. The pledge by the president of the European Central Bank last summer to do “whatever it takes” to save the euro is the single most important explanation for the relative quiet on Italy’s bond market. The Outright Monetary Transactions scheme, whereby the ECB will purchase unlimited quantities of debt of countries in difficulty, has so far proven a remarkably resilient firewall. Read more