Berlusconi in Winter

"I then understood that the only way possible in order to stop their ascent to power was to take advantage of the fact that I was the most popular entrepreneur in Italy at the time, thanks to television, publishing, and soccer. I also had many other sports. I had won the world championship of volleyball, the European championship of ice hockey. I sponsored rugby and a basketball team. In the polls there was 96 percent appreciation of me. When I saw there was no other candidate, against the advice of all my friends and all my family members, I understood that if I didn't step forward in the field of politics, nothing would happen. I decided to found a party, to stand for elections exactly and openly in order to stem the rise of the Communist party. Obviously, all of a sudden, my appreciation in the polls dropped from 96 percent to 50 percent in a week."

Few public figures would dare claim that their achievements in volleyball and rugby justified a significant political office. But Berlusconi has always taken an almost child-like delight in his achievements.

I suggest that this explanation makes him seem like a modern Cincinnatus, summoned from his plough to rescue his country. He runs his fingers through his hair, and looks off into a corner of the room, pondering the idea. "Eh. Certo." He likes it.

But why, 19 years after entering politics, is he still here? Why not return to soccer and topless game shows, which offer much more money and require much less personal exposure? He evidently loathes politics and jobbing politicians, after all. "I have met more ingrates and profiteers in politics than in any previous life as an entrepreneur." He also hates direct confrontation, whether in delivering bad news or upseting others to their face, two requisites in a political leader.

"My style as a manager and political leader has always been based on persuasion, not force," he says. "I don't know how to give orders. I know how to convince." He explains, "When you are in government you cannot seek only 'profit' for your country, you have to manage the interests of all your citizens and all different categories, interests that are often in contrast. Make one happy and you've made the other unhappy." Given the choice, Berlusconi would much rather make everyone happy, or so he says.

Last year, as Italy's economy flailed and the bond markets fretted that the country would default on its sovereign debt, it was Berlusconi's reluctance to confront the worst that undid him. Things were never so bad, he still insists. Yes, Italy's public debt is high, but so are its private savings. Add the two together, he argues, and suddenly Italy becomes the second strongest economy in Europe after Germany. "The Italian state is in debt, but Italian citizens, families, and companies are rich," he says. The debt only matters because it means taxes have to be high to pay for the interest. But there is plenty of wealth to tax in Italy, so what exactly were the bond markets fretting about?

But Italy's prospects are not so bright as he claims. Its birthrate is among the lowest in Europe and its growth rate is dismal. The great Italian post-war generation built a formidable economic base for the country, but that is today being depleted rather than renewed. Investors care about the future much more than the present, and Italy's future has not looked good for some time now.

More than the personal scandals that have beset Berlusconi, it is his failures as an economic steward which have disappointed his supporters. Many hoped he would be Italy's Margaret Thatcher, breaking the unions, reforming the labor laws, and modernizing the rigid economy. But he never did. He could not even muster a serious austerity plan last year, when it seemed as though the entire Italian economy was burning down, though his party commanded majorities in both houses of parliament. So a government of technocrats, under new Prime Minister Mario Monti, was appointed to do what Berlusconi could not.

"It is my fault and the fault of the Italians," he says. "It is my fault because I was unable to persuade 51 percent of Italians to give me my vote. It is the fault of Italians for dividing their vote, spreading it among many little parties." His party has never won more than 38 percent of the vote, forcing it into alliances with other right-wing parties. "We were castrati by these alliances. They did not allow us to introduce draft bills in the parliament as I would have liked."

Berlusconi then launched into a long digression about the flaws of Italy's constitutional system. First one house and its committees debate a bill, then the other, then back comes the bill for another round of edits before going up to the President of the Republic who can send it back to parliament if he doesn't like it, to start the process all over again. "If the government sent a thoroughbred horse to parliament, it would come back as a hippopotamus. All that remains of the horse is the Greek root 'hippo.'" But even the hippo isn't safe, because any magistrate can challenge any law in the constitutional court and have it overturned. The 15-seat constitutional court, he says, is dominated by the 11 members from the center left, and only four representing Berlusconi's center-right. "So, the work of some 1000 members of parliament, of a whole government over two years, is stultified by 11 people out of 15. This is the constitutional architecture of Italy."

Again, his frustration leads me to ask, why not give up and go back to business? "Because if I leave, that will be a triumph for the left." In any case, he says, "money is not so important." Generations of Berlusconi's have already been amply provided for. His work these days is to give his "most mature years of experience" to his country.

He will remain in politics, working to change the constitution so that it will concentrate more executive power in the Prime Minister. But he vows he will never again try to hold that office himself. He has chosen Angelino Alfano, a 41-year-old Sicilian lawyer, to lead his party, the People of Freedom. "I will stay in the party to support him. But I will be the noble father. The founding father. I will organize the support that he needs."

Nobility is not a quality many associate with Berlusconi. Ego, yes. Insecurity, bags of it. "Berlusconi lacks self-confidence," says Antonio Martino, his former foreign and defense minister, who holds the second-ever membership card issued by Berlusconi's Forza Italia political movement. Martino is a ribald Sicilian, an ever-smoking free-market economist, whose ideas once appealed to Berlusconi.

When they met in 1993, the first thing Berlusconi asked him was whether or not he liked soccer. Martino demurred. "For me, everything else is business," he recalls Berlusconi telling him. "But A.C. Milan is religion. Even if the most beautiful woman in the world asked to see me during a game, I would tell her to wait."

When Martino asked Berlusconi why he was going into politics, Berlusconi replied, "When I was in real estate, I said I would build a satellite city outside Milan and they laughed in my face. When I bought my football team and said I would win the championship, they laughed at me. When I created Mediaset, Gianni Agnelli [the late owner of Fiat], laughed in my face." By Martino's reasoning, Berlusconi went into politics to stick it to those who believed he couldn't.

"The problem is that I've never met any other successful person who talks so much about his successes."

As a businessman, Berlusconi has always inspired great loyalty. "My companies have never had an hour's strike against them," he says. "I used to spend Saturday mornings going to see and visit my staff and employees who for example were in hospital. I knew them all by name and I got to a point where I had 56,000 people working for me. In politics, it has been more or less the same. I was able to raise the sympathy, even the love of a lot of people. You should see when I go to rallies the people just physically wanted to get me, they'd follow me all the time. They say that in the history of Italy, there was not a politician able to move crowds as much as I was able to."

He talks, he claims, off the cuff without written speeches, and that his openness and personal contentment shine through. When he spoke to the salesforce at his television stations and advertising businesses, he would tell them it was vital to "carry the sun in your pocket," because optimism was attractive. "I am happy with myself," he says. "I am held in esteem by the people who love me. One third of the Italian people deeply love me and prove it to me all the time. When I walk down the streets, they clog them up, if I go to a restaurant, people stand up and clap and I can't pay a bill."

When he has failed, he believes, is when he has paid attention to his miserable critics, and let the sun in his pocket fade. The one lesson he took from Margaret Thatcher, he says, he took too late.

She once asked him to describe his working day. Up at 7:30, he told her, work all day. Then at 1:30 am read the next day's papers, get angry, and then sleep for five hours. "Really?" she said. "You read the newspapers?" "What do you do then, Mrs. Thatcher," Berlusconi asked her. She answered, "I read only the articles that speak well of me and my government, which my head of press brings to me in the morning."

"So I went back to my office and called the head of press, and I told him, Paulino, from now on, the Thatcher method," he told me. "Only the articles which speak well of me and my government. I haven't seen him in three months."

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Philip Delves Broughton is a regular contributor to The Financial Times, The Wall Street Journal, and The Spectator. He is the author of the New York Times bestseller Ahead of the Curve: Two Years at Harvard Business School and The Art of the Sale: Learning from the Masters About the Business of Life, which will be published in April.

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