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Last Updated: Thursday, 5 May 2005, 21:22 GMT 22:22 UK
Berlusconi back in the limelight

By David Willey
BBC News, Rome

Italy's media billionaire prime minister has once again bounced back into the political limelight in Italy, confounding his critics and reassuring President George W Bush of his unflinching support over Iraq.

Italian Prime Minister Silvio Berlusconi (file photo)
Silvio Berlusconi is balancing foreign and domestic pressures

It comes after Silvio Berlusconi's coalition was trounced in local elections earlier this month.

His chief political opponent, former European Commission President Romano Prodi - who is expected to lead the leftwing opposition parties challenging him in next year's general election - recently described Mr Berlusconi as being like a cat with seven lives.

Speaking before both houses of parliament in Rome, Mr Berlusconi stoutly upheld Italy's honour over the accidental shooting by US troops of the country's top intelligence agent in Iraq.

He disputed the official findings of the US military inquiry which exculpated the soldiers who killed Nicola Calipari at a Baghdad roadblock last March.

But he also said he would never let the accident sour the long-standing friendship between Italy and the US.

And he insisted he had no intention of retaliating by withdrawing the 3,000 strong Italian peacekeeping contingent from southern Iraq.

Stagnant economy

Silvio Berlusconi has now led his four-party centre-right coalition for over four years, longer than any other post-war Italian leader.

The main threat today to this media magnate, who owes much of his political fortune to his previous business successes and the accumulation of huge personal wealth, is the stagnant economy.

To err is human but to persist in one's errors is diabolical
Senator Giulio Andreotti

Productivity is low, exports are weak and this month Italy had to revise downward its economic growth forecast for 2005 to only just over 1%.

Francesco Staderini, head of the Court of Accounts, Italy's public accounting watchdog body, has issued a stern warning that there are causes for "serious anxiety" about the country's economic prospects.

He said Mr Berlusconi should consider his plan to cut taxes "very carefully" if he does not want to increase the budget deficit.

Over the past four years this has been running at an average of 4.3%.

Encouraging news

Mr Berlusconi rushed through parliament this week a package of measures aimed at boosting the economy as business morale is slumping.

He tried to insert into this package a proposal to reduce the penalties and the statute of limitations for the crime of fraudulent bankruptcy.

Italian Prime Minister Silvio Berlusconi talks to US President George W Bush (22 February 2005)
The relationship between Italy and the US has been under strain

The justice minister was forced to row back on this after protests from the judiciary and from the opposition that this amounted to a free gift to bankrupts.

Mr Berlusconi had encouraging news however from the European Court of Justice in Luxembourg.

Prosecutors in Milan had asked for a ruling as to whether a change in the Italian law relating to false accounting, pushed through parliament in Rome by Mr Berlusconi two years ago, conflicted with EU law.

The answer has come back that EU law cannot overrule Mr Berlusconi's new legislation.

Mr Berlusconi's critics had argued that this new law was crafted specifically to allow him to escape prosecution on corruption charges relating to a series of business deals before he became prime minister.

Iraq costs

During the debate in the upper house of parliament about the Baghdad shooting incident, one of Italy's most senior and respected politicians Senator Giulio Andreotti, who has served no less than seven times as prime minister, had some words of advice to Mr Berlusconi about his decision to keep Italian troops in Iraq.

Mr Andreotti warned about the costs of the war in Iraq.

Although small in relation to the costs borne by the US and Britain, Mr Andreotti said, Mr Berlusconi would do well to examine the financial implications of extending the Italian military mission there for another six months.

Mr Berlusconi had told parliament earlier that it would be "irresponsible" to bring the troops home now.

"To err is human," Mr Andreotti said, "but to persist in one's errors is diabolical".

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