The ANNOTICO Report

In the Regional Election in Italy, turnout was 71.4 percent of the more
than 41 million eligible voters, where the Berlusconi's center-right
coalition was defeated in 11 of 13 regions at stake, a defeat so crushing
that it has caused a political crisis for the government.

Berlusconi's severe political beating was attributed to (1) his
Constitutional "Reform" to delegate greater power to the regions (thereby
allowing the prosperous North to ignore the Needs of the less prosperous
South (2) his 2001 "Election Manifesto" that did not deliver on its promise
of a brighter, more prosperous Italy, often hampered by opposition from
unions and weak economic growth (3) Berlusconi's unpopular support for the
war in Iraq, that has continued to rile voters.

Reuters
By Robin Pomeroy
Tue Apr 5, 2005

ROME (Reuters) - Italians have given Prime Minister Silvio Berlusconi a
severe political beating, leaving him just one year to recover before a
general election he now looks in serious danger of losing.

Not even the death of Pope John Paul could keep Italians from delivering
the chastening message to Berlusconi at regional elections on Sunday and
Monday where his center-right coalition was defeated in 11 of 13 regions at
stake.

Defying fears that Catholics would desert the ballot boxes, the turnout was
71.4 percent of the more than 41 million eligible voters.

"It is already clear that the defeat, a defeat so crushing that it cannot
be talked down or excused, has caused a political crisis for the
government," said Italy's leading daily, the mainstream Corriere della Sera.

Berlusconi, Italy's longest-serving prime minister since World War II, has
still not commented on the defeat. His rival, the former European
Commission President Romano Prodi, basked however in a result which at a
stroke swept away what had been considerable doubts about his ability to
unite the left.

"With this vote Italians are asking us to prepare to govern, to take the
country forward," he said.

While Prodi's "Union" showed it could hold together a broad swathe of
opinion from centrists to staunch communists, one of whom was voted
president of the politically important southern region of Puglia,
Berlusconi's coalition risks implosion.

"Berlusconi will blame his coalition partners and they will blame him,"
said Politics Professor Franco Pavoncello of Rome's John Cabot University.
"But if they go down that road it's going to be very difficult for them at
the next election."

DIVISIONS

"There's a perception that this coalition is really a group of parties with
very different ideas, held together by the need to keep power," Pavoncello
said.

One of the government's most divisive policies -- the devolution of
political power, pits the populist Northern League, which wants more
independence for the rich north, against the right-wing National Alliance
whose support is drawn more from the poorer south.

That issue is not going to go away and Prodi has said he intends to make
opposition to the constitutional reforms a key part of his strategy to win
the 2006 general election.

Even more damaging to Berlusconi than the center-right's lack of unity is
the electorate's apparent rejection of his record over the past four years,
political analysts said.

"Berlusconi made promises in very triumphant tones, and they were not
kept," said Sergio Romano, a political commentator and former ambassador.

His "contract with the Italians," an election manifesto he signed with a
flourish on a TV chat show ahead of the 2001 election promised a brighter,
more prosperous Italy.

But reforms in areas such as the legal system, the labor market and the tax
system -- which were often hampered by opposition from unions and weak
economic growth -- are seen by voters as ineffective, Pavoncello said.

"The perception is that the impact wasn't that strong. He hasn't made much
of a change."

Two rounds of income tax cuts have failed to sway Italians who feel
inflation and indirect tax hikes have eroded their buying power. And
Berlusconi's unpopular support for the war in Iraq has continued to rile
voters, the analysts said.

But Berlusconi, a buoyant billionaire media tycoon with a taste for the
political fray, is unlikely to give up without a fight.

"The regional election result is far worse than anything he could have
expected, but I don't think the government is going to go home before the
election," said Pavoncello.

Despite political difficulties and internal rifts, Berlusconi's "House of
Freedom" coalition will remain in place for at least the next year for one
good reason -- its charismatic if controversial leader, Romano added.

"I think they will remain together until the end of this legislature
because they only have one leader, Berlusconi, and no alternative."