Ivor Roberts: Is Berlusconi the saviour that Italy so badly needs?

Silvio Berlusconi has redefined post-war Italian politics, roundly defeating the new leader of the centre-left – the popular, 52 year-old, outgoing Rome mayor Walter Veltroni, who is described in the US press as the Italian Barack Obama. To win a third election at the age of 71 begins to smack of Gladstone.

It may seem odd in Britain, where Sir Menzies Campbell was deposed as Liberal Democrat leader largely because he was perceived to be too old, but Mr Berlusconi, who has consistently rejuvenated himself with cosmetic surgery, has taken full advantage of the woes of the two-year-old government of Romani Prodi and returned to power untrammelled by previously moderating centrist allies.

Mr Prodi's nine-party coalition government proved a disaster: reducing living standards in an attempt to balance the books; failing to tackle the structural problems of the Italian economy, which have made it the most uncompetitive in Europe; allowing the rubbish strike in Campania to drag on until even the purity of the area's prized buffalo mozzarella cheese was called into question; and failing to broker a deal for the ailing national carrier Alitalia. The final insult came when the EU statistical office, Eurostat, announced that Spain had overtaken Italy in GDP per capita.

The two Communist parties in the coalition constantly sniped at the Prodi govrnment, forcing it to seek confidence votes to force through straightforward foreign affairs measures, such as the rotation of Italian troops in Afghanistan. And yet it was a tiny centrist party, the UDEUR of Clemente Mastella, which in January finally withdrew support from the Prodi government, precipitating its collapse.

Here is the one area of common ground among virtually all Italians: a new electoral system which virtually guarantees strong government without being constantly in thrall to extremist parties of left or right, or indeed very small parties of the centre. Mr Berlusconi has already indicated that he is prepared to collaborate with Mr Veltroni's main centre-left party to deliver a more robust system and other major institutional reforms.

And herein lies the paradox. The fathers of the Italian constitution, mindful of the lessons of Fascism, drew up a document which left the prime minister a far weaker figure than most of his European peers. An Italian PM cannot even dismiss one of his Cabinet ministers on his own authority. Not many on the centre-left are keen to support constitutional change which would allow the billionaire Mr Berlusconi, who has ferociously attacked the judiciary and impugned their impartiality and independence, increased powers. His allies, especially the quasi-separatist Lega Nord (Northern League), which performed surprisingly well in the elections, will also be keen not to see an over-powerful, centralising government.

But the Italian public needs above all a government which can bring about the fundamental economic reforms which were introduced in Britain in the 1980s and which Nicolas Sarkozy now wants to introduce in France. The Italian economy is currently grinding along at virtually zero growth (0.5 per cent), very poor productivity and competitiveness, a public debt-GDP ratio of more than 100 per cent, which will help push the fiscal deficit up to the eurozone maximum of 3 per cent, and one of the most inflexible labour markets in Western Europe, where shedding labour is virtually impossible.

Plans to reform the bloated pension system have been watered down and centralised wage bargaining remains intact. To add to the list of problems for the incoming government, the Mafia is said by Confesercenti, an association of small businesses, to control 7 per cent of Italy's GDP, making it the largest single segment of the economy.

It is no wonder that, during a recent visit to the US, I heard doubt being expressed in more than one quarter as to whether Italy still deserves its place at the G7, the capitalist top table. Perhaps the threat of expulsion and the humiliation of being overtaken or replaced by Spain will be the catharsis Italy needs. Certainly Mr Berlusconi, given his third chance to lead the country, and with a thumping majority, needs to refocus his attention away from the literally ad hominem legislation, which so disfigured his last government, and towards the crises which put paid to the Prodi government.

Mr Berlusconi has pledged to hold his first Cabinet meeting in Naples and to make the rubbish strike there and Alitalia's fate his top priorities. Not before time. The moment for wisecracks is over.

The author is president of Trinity College, Oxford, and was the British ambassador to Italy from 2000 to 2003