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. Last Updated: 07/27/2016

EUROFILE: Again, Politics Holds Back Italy's Progress

Italy exudes calm and confidence at the moment. For a country whose government came close to collapse last week for the third time in 15 months, this may seem surprising. But there are good reasons for Italy's sunny outlook.

Having been named at the start of May as one of the 11 founder-members of the European Union's single currency, Italy feels in fine form. It senses that its EU partners, especially Germany and the Netherlands, have finally accorded it the respect it deserves as a leading European nation.

No longer are the Italians convulsed with suspicion that politicians and officials from other countries are whispering behind their backs about Italy's lack of readiness for the euro. No longer do Italy's critics mutter about the supposedly permanent instability of the Italian political system.

Instead, all the talk is about the remarkable determination with which the government in Rome has slashed the national budget deficit over the past two years, ensuring qualification for the euro. As for the political system, so corrupt and chaotic for most of the post-1945 era, it seems capable of maturing into an orderly, transparent contest between a bloc of forces on the left and a bloc on the right which will smoothly alternate in power.

This is one version of what is happening in Italy. It is a version that emphasizes the positive. It is not that far off the truth.

But it is not the whole truth. Italy's economic performance leaves something to be desired. In contrast to France and Germany, where growth is robust and unemployment is railing, Italy's economy contracted in the first three months of this year. The Italian jobless rate rose to 12.5 percent in April from 12.2 percent in January.

A vast amount of work remains to be done to deregulate the economy and shake up the woefully inefficient bureaucracy. The mezzogiorno, the notoriously backward south, is nothing like as well-prepared as Italy's northern regions for the competitive pressures that will come with the euro.

But it is perhaps the political system that provides most cause for concern. All its fundamental weaknesses were exposed last week when the center-left government of Prime Minister Romano Prodi was forced to rely on opposition votes to secure the passage of a vital piece of legislation, namely, Italian approval of NATO's decision to admit the Czech Republic, Hungary and Poland.

Prodi was put in this embarrassing position because of the anti-NATO views of the hard-left Refounded Communists, whose votes give the government its majority in parliament. Yet by turning for support to a newly formed opposition party led by former President Francesco Cossiga, the government undermined its own professed faith in a bipolar political system.

For Cossiga's apparent aim is to return Italy to the days when a large bloc of centrist and center-right politicians, once known as Christian Democrats, hold power in perpetuity.

Prodi's supporters swear that the prime minister would rather resign than do another deal with Cossiga or cave in to the Refounded Communists. But the truth is that he is trapped. Without the support of either the hard left or Cossiga he has no majority.

That in turn means he cannot push through the social and economic reforms the nation desperately needs. As in the past, it is Italy's political system that is holding up progress.