WHEN Italian Prime Minister Bettino Craxi visits Washington tomorrow, he will bring with him a new image of a nation that in recent years has been considered the weak economy of the Western industrialized countries. Italy has suffered from high unemployment and double-digit inflation for 15 years, and the country's political system has been the most unstable in the West. Now, despite the Christmas Eve terrorist bombing of the Naples-Milan train, which marred the government's excellent 1984 record, the Italian Republic appears to have reversed the gloomy tide that threatened to overwhelm it. The most important sign of the country's new phase has been the longevity of Mr. Craxi's government, Italy's first under a Socialist prime minister.
Constituted on Aug. 4, 1983, the present Cabinet has already lasted twice the eight-month average for Italian governments in recent years and has equaled the life span of Giulio Andreotti's 1976 ``national solidarity'' Cabinet, which came to power in 1976 with Communist external support.
Mr. Craxi has thus achieved his first major aim of ``governability,'' giving Italy a long period of political stability and continuity in the hope of carrying out significant reforms. Before the 1983 elections and during his first trip to the United States, Craxi expressed his hope of three continuous years in power, a goal that no longer seems so unrealistic.
Even more significant, Craxi has not chosen merely to survive by doing nothing -- the usual route to a long Cabinet life in Italy -- but his government has been extraordinarily active in a number of important areas. In one courageous act, the government issued a decree law on Feb. 14, 1984, which reduced automatic cost-of-living raises for workers.
Most economists considered reduction of automatic cost-of-living increases necessary to bring down Italy's inflation rate; combined with the freezing of rent increases, inflation dropped to the single numbers for the first time in more than a decade, and the Italians hope to get it into the 7 percent range this year. Craxi has ready a plan to introduce a so-called ``heavy lira,'' in case this progress continues. Eliminating the last three zeros of the Italian currency would greatly simplify accounting procedures, but above all it would permanently link Craxi's name to the victory over inflation and bolster Italy's economic prestige.
Communist opposition to Mr. Craxi diminished after the elections for the European Parliament last June, despite a Socialist disappointment and the Communists' ``surpassing'' of the Christian Democrats as the largest Italian party. While in part attributable to the death of Craxi's bitter rival, PCI [communist party] Secretary Enrico Berlinguer, more important has been the Cabinet's attempt to balance its previous inflation-reducing actions against salaried workers by stemming the massive tax evasion by independent merchants and shopkeepers, who, in many cases, pay fewer taxes than their employees.
In short, the periodic resistance the government encounters from representatives of various economic interests indicates that the Cabinet is following, on the whole, an equitable economic policy necessary for restoration of the nation's economic health.
Counterpointing Italy's improving economic performance and increased political stability, the government has undertaken several important foreign policy initiatives:
At the end last year, Craxi made lightning visits to four important Middle Eastern capitals and had a long conversation with Yasser Arafat, the Palestinian leader, underscoring a possible Economic Community move to sponsor creation of a Palestinian state loosely linked to Jordan during Italy's presidency of the EC, which began in January. Despite the opposition this initiative aroused in Israel and in the Italian Republican Party, which holds the important Defense Ministry, such actions make Italy more visible in a troubled area crucial to the country's future and where it enjoys considerable goodwill. The same can be said for Foreign Minister Andreotti's official visit to Warsaw, where he achieved what the Poles denied the Germans: an official appearance at Fr. Jerzy Popieluszko's tomb. In another action at the end of 1984, the government appropriated substantial funds to combat world hunger.
Craxi's performance in office may be about to bear political fruit. He has never been a popular figure, but recent polls indicate significant increases in his popularity. In an interview with this writer, Italian President Sandro Pertini described Craxi as ``energetic'' and ``able.'' Politicians anxiously await the next local elections, scheduled for May, as a crucial judgment by the nation of Craxi's performance.
Despite his undeniable successes, he faces important problems that will test his political acumen. Craxi himself has noted the danger of a terrorist revival.
In his New Year's message to the nation, President Pertini challenged the government to translate its victory over inflation into decreased unemployment, which is still officially at 10.3 percent but actually higher. With continuing robotization and modernization, many experts predict increasing unemployment. Public industry, a major component of the Italian economy, is still in difficulty, despite encouraging signs of recovery. The nation's export industries must increase their efficiency if they are to lead the recovery. Tax reform remains an urgent consideration. Competition among the parties composing the majority periodically threatens the Cabinet's life, while the powerful Communist Party has already proposed a different majority in which it would participate. Even in Craxi's own party, critical undercurrents object to his leadership as having abandoned ideological socialism. Most of all, with only 11 percent of the total electorate, the Socialist Party remains a relatively small party, constantly running the risk of being crushed between Communists and Roman Catholics.
A supremely confident Craxi shrugs off these problems. ``The ship is on the right course,'' he said during a year-end news conference. ``I will remain at my post holding high the flag. If the other officers do not wish to follow orders . . . they can ask to be let off at the first port.''
Spencer Di Scala is associate professor of history at the University of Massachusetts, Boston, and is the author of ``Dilemmas of Italian Socialism.''