Italians voice growing dismay with their flashy prime minister

Berlusconi loses ground over public gaffes and laws that protect his business interests.

At the popular Bar Malvolti in this Tuscan city, customers confirm what last month's regional and local elections demonstrated: Prime Minister Silvio Berlusconi is losing ground with moderates and liberals who helped elect him.

While patrons talk of the need for pension reform, economic stimulus, immigration, and health care, the image of Berlusconi's first two years in office is increasingly centered on dismay over legislation aimed at protecting the media mogul's business interests - not to mention insults he made as the new head of the European Union that sent shockwaves through Europe.

"It was pretty clear early on that he was more interested in his own business interests and keeping himself out of jail than he was in his citizens," says Fabio Monti, a police officer who often walks a beat in the center of town.

"He's a brilliant tactician who has looked after his own interests beautifully," says James Walston, director of the Department of International Relations at the American University in Rome. "But what he's given the average Italian citizen is embarrassment."

Even before Berlusconi drew international headlines last week for his misstep in comparing a German lawmaker to a Nazi prison guard, there was evidence of a power shift at home.

In last month's local and regional elections, the center right lost control of the key province of Rome - home to the country's capital - and the northern province of Friuli Venezia Giulia, where Berlusconi's coalition was thought to be unbeatable.

Of the 10 provincial capitals reelecting municipal governments, six now are controlled by the left, four by the right. Before, those numbers were inverted.

The current flap began the last week of June. Italy's legislature, controlled by the center right, scrambled under vice premier Gianfranco Fini, head of the neofascist National Alliance, to pass a law to protect the prime minister and other senior lawmakers from prosecution while in office.

The law passed just in time to shore up Berlusconi as he stepped into the European spotlight. But then Berlusconi insulted the German lawmaker and referred to other parliamentarians as "mere tourists of democracy" - a move that has strained Berlusconi's ties with his coalition on the right.

"Even his allies couldn't believe what he'd said, and I think it hurt him psychologically with the electorate," said Franco Pavoncello, a professor at John Cabot University of Rome.

The problem intensified when a junior tourism minister, Stefano Stefani, last Friday described some German tourists as "arrogant hypernationalists" who "invade Italy's beaches" every year. On Wednesday, German Chancellor Gerhard Schröder responded by canceling his upcoming Italian holiday.

As EU president, Berlusconi faces an unusually heavy agenda during his six-month term: Negotiating the final points of the first EU constitution, energizing the European economy, developing a single foreign-policy voice while mending fences with the US over Iraq, and overseeing expansion of EU membership.

"After last week, I suspect that other EU leaders will push aside what he wants to achieve personally during his term" like getting Christianity mentioned in the constitution, Dr. Walston says. "Unless there is strong support in general for a particular point, he's likely to be dismissed."

Events of recent weeks also tell the customers of Bar Malvolti that their prime minister almost certainly will remain in power through the 2005 election.

Experts agree that Berlusconi will not face prison unless Italy's Supreme Court rejects by Jan. 1, 2004, the constitutionality of the law giving him immunity, and prosecution star s right away. "Trials against him are frozen," Pavoncello says. "If he makes it to Jan. 1, he is virtually a free man."

Identified by Forbes as the world's third most powerful billionaire in 2002, Berlusconi used his media empire and wealth in 1994 to create the Forza Italia (Come On Italy) Party and get elected prime minister.

But just seven months after his election, his coalition fell apart when he was indicted for tax fraud and ousted. Berlusconi reemerged in a landslide victory in May 2001, after cementing ties with the far-right Northern League and the National Alliance.

Despite the current uproar, Berlusconi's strength among Italy's conservatives remains strong, says Paolo Briganti, a journalist with La Nazione. "He is not a politician but a businessman in politics, very similar to the situation in America with George Bush," Briganti said. "Italians on the right like that and believe his business sense is great for major industry especially."

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