Berlusconi Shows Italy No One Does It Better Maneuvering Rebound

May 14 (Bloomberg) -- Bloomberg Billionaires Editor Rob LaFranco breaks down the wealth of former Italian Prime Minister Silvio Berlusconi, whose fortune totals in the billions. He speaks on Bloomberg Television's "The Pulse."

Silvio Berlusconi’s latest political resurrection took just weeks.

The 76-year-old billionaire, three-time prime minister and two-time convicted lawbreaker was the first Italian leader to cease hostilities and seek conciliation after inconclusive elections in February. The vote resulted in a three-way split that prevented any one bloc from taking power.

By portraying himself as above petty politics and as a target of vindictive prosecutors, the country’s most successful living politician turned a losing hand into a winner when the impasse broke. He gained clout over the fate of Prime Minister Enrico Letta, whose April 27 appointment he helped broker.

“Berlusconi is in a position to pull the plug on the government how and when he wants to,” Stefano Rodota, a former European lawmaker and presidential candidate for the opposition Five Star movement, said May 3 in a televised interview on La7. “From the very beginning, he indicated the path to follow, the majority to put together and the type of government. And that’s what we have.”

Italian bonds rallied as the gridlock ebbed, even as Berlusconi advocated rolling back the austerity measures promoted by ex-Premier Mario Monti. The yield on two-year notes dropped below 1 percent last week from above 2 percent the day after the vote. Ten-year yields fell to as low as 3.7 percent on May 3 from 4.9 percent on Feb. 26.

Photographer: Olivier Morin/AFP/Getty Images

Silvio Berlusconi, Italy's former prime minister, delivers a speech during a rally organised by the People of Freedom party (PDL) in Brescia on May 11, 2013. Close

Silvio Berlusconi, Italy's former prime minister, delivers a speech during a rally... Read More

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Photographer: Olivier Morin/AFP/Getty Images

Silvio Berlusconi, Italy's former prime minister, delivers a speech during a rally organised by the People of Freedom party (PDL) in Brescia on May 11, 2013.

Berlusconi has his hand back in policymaking 18 months after being hounded from office amid the European debt crisis -- when the two-year yield hit 8 percent -- and accusations by prosecutors that he paid a minor for sex.

Court Cases

His legal woes have since grown. On May 8, a Milan appeals court upheld his October tax-fraud conviction that carried a four-year prison sentence. Berlusconi was convicted in a wiretapping trial in March, and Naples prosecutors announced in February he was under investigation on suspicion of corruption in parliament. That probe has prompted prosecutors to ask for an indictment, Ansa reported on May 9. The sex-trial verdict could come as soon as this month.

In Italy, convictions aren’t considered final until appeals are exhausted. Berlusconi, who has denied all charges, won’t face imprisonment on his two convictions unless they are upheld on final appeals, which must be completed before the statutes of limitations expire. That deadline is July of next year in the tax-fraud case, Corriere della Sera reported.

Less than seven months after announcing he was stepping back from politics, Berlusconi’s return is a familiar story to voters who handed him defeat three times in six elections since 1994. Berlusconi, whose coalition took 29.2 percent in the February vote, built from a base that never deserted him. His bloc's support rose to 32.5 percent on March 29 and 35.9 percent on May 10, show surveys by SWG Institute, which is based in Trieste. The margin of error was 2.9 percentage points.

Bersani’s Fade

As Berlusconi gained strength, Pier Luigi Bersani, the election winner in February, was cast aside by his Democratic Party and denied a place in power.

The first step to Berlusconi’s political recovery came with his Feb. 26 concession, hours after an all-night vote count ended. The loss, by 280,000 votes, left him powerless in parliament to block two triumphant rivals who had vowed to end his career. In those first remarks, Berlusconi renounced a recount and said it was time for rivals to cooperate.

“Everyone needs to think what good can be done for Italy,” Berlusconi said in the interview on Canale 5, a television network he owns through his Mediaset SpA. (MS) “We need to see on what points we can agree with the other coalitions.”

Eye Ailment

That offer was spurned, and for the next month Berlusconi focused on his trials and health. On March 7, he was convicted of leaking transcripts of tapped phone calls to discredit a political rival. The next day, when he was due in court for the closing arguments of the sex trial, he entered Milan’s San Raffaele Hospital for a week with an eye ailment.

Berlusconi’s reign as the dominant politician of his era is defined by bluster and charm. He polarized the country, showering allies with good humor and promises and bearing down on rivals with invective and ridicule. While those two facets of his leadership style were on public display after the vote, he toned down his derision for lawmakers he previously mocked, reserving his bluster for prosecutors and judges.

A March 11 showdown on the steps of the Milan courthouse was a show of strength. Allies in parliament marched to protest the judges on Berlusconi’s cases. They’d ordered the ex-premier, confined to his hospital suite across town, to a medical review to corroborate his request for delays.

The lawmakers wanted to “defend the republican institutions that in our view are under attack,” said Berlusconi ally Angelino Alfano, now interior minister and deputy premier.

‘Cancer’ on Democracy

The campaign against judges, which prompted President Giorgio Napolitano to intervene the day after the protest, may have even helped Berlusconi’s recovery in opinion polls. He got an ovation from allies when he showed up in the Senate on March 16 and prepared a rally in Rome for the end of that month against the judiciary, who he referred to as “a cancer on Italy’s democracy” that was bent on political persecution.

“Every time he says that he gains votes,” Florence Mayor Matteo Renzi, a member of Bersani’s Democratic Party and tabbed by opinion polls as Italy’s most popular politician, said May 3 at a festival in Northern Italy. “Silvio Berlusconi must be sent into retirement, not jail.”

Meantime, Bersani and Beppe Grillo, head of the anti-establishment Five Star Movement, were unable to reach an alliance that extended beyond anti-Berlusconi appeals. Bersani refused to compromise by splitting his seats in the government. Grillo lampooned the Democratic Party leader’s inability to forge consensus, calling him “a dead man talking.”

Napolitano’s Order

Berlusconi won breathing room from his trials after Napolitano, who reprimanded Alfano and his collaborators for the courthouse protest, instructed judges to help ease the tension. Trial appointments were suspended as the court deliberated over Berlusconi’s request for a change in venue.

By the time Berlusconi led the rally in Rome on March 23, he was no longer on the defensive.

The demonstration, which he called “Everyone with Silvio,” and gave Berlusconi a platform to go beyond his criticism of the judicial system to place his policy demands, centered around tax cuts, before what he predicted would be a coalition government.

“He has always been that way, always changed,” said Giuliano Ferrara, editor of newspaper Il Foglio and minister for parliamentary affairs in Berlusconi’s first government 19 years ago. “He understood it was the only realistic solution.”

Rivals Concede

After eight weeks of deadlock, Berlusconi’s rivals conceded.

Bersani resigned the leadership of the Democratic Party and the torch passed to Letta, who installed his government with Berlusconi’s support in an April 30 confidence vote. The day before, in the premier’s first speech before the Chamber of Deputies, Berlusconi’s influence was evident when Letta announced the suspension of a property tax that Berlusconi had made the center of his campaign.

Ministers agreed yesterday to scale back participating in rallies after Alfano and Berlusconi allies joined in a protest in the northern city of Brescia against the judiciary.

“There’s a saying by Gandhi that has always touched me,” Berlusconi said of the Indian nationalist leader as he addressed the flag-waving Italians who jammed the Piazza del Popolo on March 23. “First they ignore you, then they laugh at you, then they fight you -- and then you win.”

To contact the reporter on this story: Andrew Frye in Rome at afrye@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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