The mid-May Italian election victory of Silvio Berlusconi’s right wing House of Liberty alliance grabbed the headlines. Some commentators, like the Wall Street Journal, hoped that the defeat of the Olive Tree centre-left government, along with having Bush II sitting in the White House, marked a further step towards securing right-wing governments around the world.

Internationally many workers and radicalised youth were shocked by the victory of this bloc led by the megalomaniac and three times convicted billionaire Berlusconi, the "post-fascist" Fini and the racist Bossi. Immediate comparisons were made with Austria, where last year’s entry into the government of Haider’s FPÃ- sparked off mass protests.

While the timing is not clear, Berlusconi has already been warned that attacks on the working class’s conditions and on pensions will be fiercely resisted. Italian workers have not been cowed by the right’s success. Five days after Berlusconi’s election victory tens of thousands of metal workers in Milan, Rome, Turin and other cities staged four-hour strikes and demonstrated in support of wage demands, sometimes being joined on the streets by other groups of workers. Two weeks later, the Mayoral run-off elections saw high profile defeats for Berlusconi’s candidates in Rome, Naples and Turin.

Berlusconi’s national electoral victory only told part of the story. Forza Italia, the party he himself founded in January 1994, did increase its vote significantly from 7,712,149 in April 1996 to 10,923,146 in the Chamber of Deputies election. But the total number of votes for the Chamber of Deputies won this time by the parties in his House of Liberty alliance was 1,157,664 less than they received in the last election.

In fact votes for most parties, including centre and left parties, fell. A growing mood of dissatisfaction with all parties was shown in the 3,194,000 spoilt or blank votes cast in the Chamber of Deputies vote.

This right wing election victory has many lessons for activists. Less than seven years ago, two general strikes and a huge one and a half million strong demonstration in Rome on November 12 1994 helped bring down Berlusconi’s first attempt at government. Now he is on the verge of forming his second government. How did this happen, what does it mean for Italy and what can both the workers’ movement and the growing international anti-capitalist resistance learn from this?

May’s election witnessed a massive polarisation in Italian society. 81.2% of the electorate turned out to vote, slightly less than the 82.9% in 1996. This still massive turnout exposed one of the many cutbacks made by the "centre-left" Olive Tree government when in power. It had cut the number of polling stations by a third, from 90,000 to 60,000. However this reduced number could not cope with the millions wanting to vote. So the voting hours were extended with the last polling station closing at 5am, seven hours after the planned official close.

In the final run up to the election, the gap narrowed between Berlusconi’s rightwing bloc and the Olive Tree coalition. Clearly many who voted for the Olive Tree did so in order to try to stop the House of Liberty, not out of support for the outgoing government’s policies.

The election winner Berlusconi and his House of Liberty now plan to form Italy’s 59 th government since 1945 and clearly hope that it will last longer then their 220-day stay in office in 1994.

The reasons for Berlusconi’s election victory, which amounts to a big defeat for the working class, lies in what happened after 1994.

The defeated centre-left Olive Tree coalition had ruled since the last elections in 1996, when they replaced the caretaker "technocratic" government led by Dini. The main party in the Olive Tree government was the DS (Democratic Left), representing the bulk of the former Communist Party, whose leaders carried out a policy very similar to New Labour’s in Britain. In this election the other forces running under the Olive Tree banner included Margherita (Daisyflower, a group of centre-left former Christian Democrats), Il Girasole (Sunflower, a grouping of Green and left socialists) and the Pdci (Italian Communists, a right-wing split from Rifondazione Communista).

Rapidly after its formation in May 1996 disappointment grew with the Olive Tree’s government as it failed to deliver. Taxes were increased and public spending limited in a drive to meet the criteria to join the European Monetary Union. Despite recent economic growth, unemployment only slowly declined; it is still officially 9.9%, while real wages have been falling. As part of its misnamed "reform" programme the Olive Tree carried through a very rapid casualisation of labour in 2000. Within one year, two million workers became temporary workers, and a further two million were forced to become "self-employed" - i.e. working for the same boss but without collective wage agreements. In this election the Olive Tree’s main candidate, Rome’s Mayor Rutelli, promised to fundamentally continue with the same policies.

Just before the election the London Financial Times commented, "The left’s programme is more rigorous. The Olive Tree coalition has enjoyed some success since winning power in 1996. It kept a lid on public spending, squeezing Italy into monetary union. But this historic achievement has consumed three high-quality prime ministers in five years" (30 April 2001). The turnover in prime ministers reflected increasing disappointment, disappointment that Berlusconi attempted to exploit, especially among the young.

Berlusconi, whose fortune is estimated by Forbes magazine at $13bn, ran a very highly personalised and demagogic populist campaign. Berlusconi, who proclaims himself "anointed by the Lord", fully utilised his personally owned, mass media empire to mobilise support. Questions concerning his court convictions, and allegations of corruption and Mafia links, were brushed aside. After the Economist said he was unfit to rule Italy, Berlusconi attacked its editor who, he claimed, has "a vague resemblance to Lenin".

The criticism of Berlusconi by other capitalists has two sides. Firstly, his rivals fear that he will utilise any period in government to the advantage of his own, still privately owned, companies. It is commonly understood that one of the reasons Berlusconi originally launched, and still to this day finances, Forza Italia was "as a way of protecting himself from the mounting inquiries of Milan’s public prosecutors" (London Financial Times 12 th March 2001). Already one of Berlusconi’s newly elected MPs has been arrested after the rejection of an appeal against a guilty verdict in a 1994 corruption trial that also saw Berlusconi’s younger brother, Paolo, convicted.

Secondly there is a fear that this right wing government will, sooner or later, provoke an angry response from the Italian working class. Berlusconi’s personal deep hatred of the left frequently bursts out. Just days after the election he exclaimed that Italian "Public television has been occupied militarily by the ruling left".

The Italian ruling class’ problem is that, since the Christian Democrats disintegrated in the early1990s, they have had no stable political force through which to rule. The Democratic Left’s leaders are reliably pro-capitalist, but they are steadily losing their popular base. Now the election result has forced them to accept a Berlusconi led government, but it is clear that some elements in the ruling class will attempt to rein him in. It is not accidental that Berlusconi rejected the demands of both his main allies, the AN and Lega Nord, to be given the speakerships they wanted in the Chamber of Deputies and the Senate. However other sections of the Italian bosses want to take advantage of this new right wing government, a senior figure in the International Monetary Fund said that Berlusconi has now an "historic opportunity" to implement structural changes.

The open tensions within the House of Liberty coalition over who gets which government and parliamentary position is not a good omen for Berlusconi. Italy’s deteriorating economic prospects will place great strains on Berlusconi’s shaky election alliance with both the AN and Lega Nord.

The Alleanza Nazionale (AN, National Alliance) was formed in 1995 by the neo-fascist MSI renaming itself. While now officially "post-fascist", it still has strong fascist elements within in. At Berlusconi’s Naples election rally the AN youth wing were selling CD-ROMs containing the writings of Almirante, one of the MSI’s founders and a minister in Mussolini’s rump fascist "Salo Republic" of 1943/45.

Furthermore the House of Liberty’s elastic boundaries were shown by its election alliance in Sicily with Fiamma Tricolore, the hardcore neo-fascists who split from the MSI when it converted itself into the AN. But the far right are not in a position to try to repeat Mussolini’s dictatorial rule. Today’s balance of forces means that any attempt by either the "post-fascists" or neo-fascists to directly attack the workers’ movement will be met by a vigorous counter-offensive. While in this election the AN’s own vote fell from 5,870,491 to 4,459,397, the House of Liberty’s victory illustrates the general danger that disappointment with the left can open the door to the right.

Berlusconi did not achieve a clear-cut parliamentary victory. In the upper house, the Senate, he will depend upon either the Lega Nord or some of the nine, unelected Life Senators to have a majority. From its launch there have been tensions within the House of Liberty. The Lega Nord’s policies of regionalism are in direct conflict with the bigger AN’s centralist principles, but these differences were papered over as the right bloc sought to win a majority.

However the Lega Nord paid the price for its leader, Bossi’s, opportunist zigzagging with a sharp drop in its vote - down from 3,776,354 to 1,461,854. Its campaign to "Stop immigration" and "Defend Christian values" did not prevent its percentage falling from 10.1% to 3.9%. It is not yet clear what Bossi will do in order to try to restore his fortunes. He has complained about flaws in the vote counting, describing the elections as "episodes from a South American dictatorship". Trying to increase his barging power Bossi has stated that the Lega Nord’s 16 Senators will "determine" whether Berlusconi has a majority in the Senate. In 1994 the Lega Nord brought down the previous Berlusconi government when the mass opposition became too much. Bossi’s erstwhile allies fear he will do the same again.

The House of Liberty’s populist campaign offered change and demagogically promised to create 1.5 million new jobs within five years, cut taxes ("Less taxes for all"), raise the minimum pension to £322 a month and start more public infrastructure projects. Berlusconi presented himself as the successful businessman who would run the country as "Italy Inc.". But the ‘House’ did not have a serious programme; it only published its manifesto six days before the election.

But such was the disappointment with the Olive Tree that Berlusconi was able to win a significant part of the youth vote. This was seen in the different votes between the elections for the Chamber of Deputies, where all over 18 years old can vote, and the Senate where only those aged 25 and over can participate. While winning 18,390,893 votes in the Chamber’s election Forza Italia won 14,395,822 in the Senate vote, the difference giving an indication of how many under 25s voted for Berlusconi’s party.

In contrast the Olive Tree’s Senate vote, 13,013,276, was actually higher than its 12,958,974 Chamber vote. A reason for this was the polarisation caused by the fear, particularly among older people, of Berlusconi, Fini and Bossi running a government and the widespread hope that they could be prevented from winning a majority in the Senate.

Within the Olive Tree there was the continuing decline of the Democratic Left (DS), the renamed party launched by the leaders of the Communist Party (PCI) in 1991. The electoral highpoint of the former PCI was in 1976 when it won 12,620,509 votes (34.4%). But this vote for change was frustrated. The then PCI leader Berlinguer had pushed through a policy of a "historic compromise" when led the party into a de facto coalition with the totally corrupt Christian Democrats.

The disappointment produced by its leaders’ increasingly pro-capitalist policies has resulted, since then, in a virtually continuous decline in support for the PCI and its successor the PDS, now called simply DS.

The PCI leadership’s 1990 proposal to move the party further to the right and rename it the Democratic Left Party (PDS) led to the left split which formed the Rifondazione Communista (PRC, Party of Refounded Communism) ten years ago in early 1991. Almost immediately the PRC attracted new activists, not simply disappointed members of the old PCI, and made its mark in elections, winning 5.2% of the vote in the April 1992 general election.

By the time of the 1996 general election the PRC was able to win 3,213,748 votes, 8.6% of the total. But then its leaders were confronted with the question of what to do with this support in the situation where the Olive Tree coalition had the opportunity to form a minority government. The PRC decided correctly to allow the Olive Tree form a government in May 1996. This was the first time ever that the DS (then called the PDS) had effectively led an administration and many workers had high hopes of it. But while it was right to allow workers to have, and learn from, the experience of a PDS led government, the PRC was completely wrong to extend support to the Olive Tree’s capitalist policies.

For the first 18 months of this first Olive Tree government the PRC leaders effectively allowed it to carry out attacks on the working class. On 25 September 1997 the PRC paper, Liberazione, commented, "We have voted for cuts amounting to 100,000 billion lira (about $60 billion)".

This policy produced growing tensions within the PRC. In the October 1997 the PRC withdrew its support from the Olive Tree government because of $2.96 billion cuts proposed in the 1998 budget. However, within a week, the PRC leaders made a 180-degree turn and agreed to support both the government and reduced cuts of $2.66 billion in return for various limited concessions. This meant that the PRC was seen as continuing to support the government’s policies and was deemed to be at least partly responsible for its anti-working class measures.

By the time of the following year’s budget discussions the pressure that become such that the PRC leaders again withdrew support from the Prodi-led Olive Tree government. This time they did not reverse their position. The resulting government crisis led to the PRC right wing, led by party founder Cossutta, splitting away, forming their own party (the Italian Communists, Pdci) and joining the new Olive Tree government, whose new Prime Minister was PDS leader D’Alema.

However even after 1998 the PRC still did not have a consistent socialist policy. This, along with the election’s polarisation, was the reason for the fall in its vote from 3,213,748 in 1996 to 1,868,113 - a fall which could not be simply accounted for by the Pdci’s 619,912 tally. A worrying sign regarding the PRC’s appeal to youth was that its vote among the over-25 year olds in the Senate election was only 162,380 lower than its total for the Chamber of Deputies.

Clearly by not sufficiently distinguishing its own policies, the PRC was unable to gain from the Olive Tree’s growing unpopularity. The total number of spoilt or blank votes indicated the numbers looking for an alternative. Comparing the Chamber with the Senate vote, it seems that about 914,000 of the 3,194,000 Chamber voters who refused to support any party were under 25 years old. This is a layer to whom an energetic, consistent anti-capitalist and socialist PRC campaign could have appealed.

The House of Liberty will not have a stable period in government. The developing world economic slowdown will have a big impact on Italy, one of the weaker links in the Euro.

Since joining the EMU Italian industry has not been able to use regular currency devaluations - its traditional method of maintaining competitiveness. One result already is that Italy’s trade surplus fell from 4.4% of GDP in 1996 to 0.2% in the year 2000. The squeeze has been particularly hard on its many small companies. Since 1996 Italy has grown at 1.7% on average compared with 2.5% for the whole of the euro-zone.

Notwithstanding the cuts the Olive Tree government made, Italy’s government debt rose in 2000 by 1.3% of GDP (0.2% over target), despite a 2.9% growth in the economy - the highest since 1995.

This election result will not mean a long period of stability in Italy. Economic forecasts are now being cut. At the end of May Italy’s central bank governor, Fazio, wanted that lower economic growth will mean a "substantially higher" budget deficit this year. This may mean the government "limiting immediate cash spending" and, Fazio added, would make it difficult for Berlusconi to carry out his tax cut and public works promises.

The House of Liberty government will be caught in a vice between its populist election promises, the economic situation and the limitations placed by the euro on the national room to manoeuvre. This situation could very easily result in a major crisis for the entire European Union. Faced with being unable to carry out its promises Berlusconi may attempt a nationalist campaign against both the EU and immigrants in order to divert attention and retain power.

Despite parliamentary defeat, the Italian working class has not been defeated in every respect. This is why the House of Liberty leaders have stated that they will try to avoid a direct confrontation with the trade unions by not attacking the existing nationally agreed labour contract system. But the likely Finance Minister, Tremonti, plans to introduce "flexible contracts" for young people, disappointing the youth lured into voting for the right parties.

However battles with the trade unions over questions like pay, job security and pensions are still likely sooner or later. Already before the election warnings of industrial action to prevent pension counter-reforms was threatened by Sabattini, leader of the metalworkers’ section of the largest federation, the CGIL. He went on to say that such action "could easily develop into a general strike".

Sections of the employers do want to take advantage of the new right wing government to launch further attacks on the working class in an attempt to regain some competitiveness. D’Amato, leader of the Confindustria (Italy’s main bosses organisation), opened its May conference by demanding that the new government support the bosses 10 point programme of demands which include giving employers the right to sack workers when they need to, a generalised system of time limited labour contracts, "reform" of pensions and privatisation. D’Amato told Berlusconi that he must be prepared to make "difficult decisions, perhaps at first unpopular ones".

These demands produced a warning from the leader of the GCIL union federation leader Cerfeda saying that "If the Berlusconi government follows this programme, we are heading for social breakdown". However D’Amato does not necessarily represent the major Italian bosses, who are more wary of directly challenging the working class. A Naples packaging contractor, D’Amato last year won the Confindustria leadership by defeating a rival candidate backed by the giant Fiat auto company and is really more typical of the 96% of Italian companies that have less than 100 employees.

It is not clear whether there will be an immediate movement against Berlusconi as in 1994. The trade union leaders may be threatening action in words, whether they actually mobilise their members in action is another question. Furthermore, given the deep disappointment with the Olive Tree government, many workers will be asking what is the alternative to the House of Liberty? Simply saying go back to the Olive Tree is not an answer, the election result shows that.

This once again poses the question of what the PRC does. Under the previous Berlusconi government in 1994 PRC enjoyed a swift rise in support, in just over a year its national vote rose from 6% to 8.4%. But it has been tarnished by its inconsistent policy towards the Olive Tree government. After the mayoral election results, where the PRC did not run candidates, there undoubtedly will be pressure on the PRC to link up with the Olive Tree coalition. But this would be a serious mistake.

While not ruling out temporary, limited agreements against Berlusconi’s alliance, it is essential for the PRC’s future that it maintains, at all times, complete political independence from the Olive Tree’s capitalist policies. After all it was the experience of the Olive Tree governments that opened the door to Berlusconi’s victory. Only the adoption of a fighting policy can enable the PRC to achieve its aim of refounding Marxism as mass force in Italy.

If the PRC now takes a lead in fighting against new cuts and counter-reforms; struggling to defend and increase living standards; resisting job cuts and arguing for a socialist programme; then it will play a key role in both against the new right wing government and in building mass support for the real socialist alternative of breaking with capitalism.

In this situation the planned protests against this July’s G8 summit in Genoa could take on a wider significance, not only being a further mobilisation against capitalist globalisation and the policies of the imperialist powers, but also marking the first mass mobilisation against the Berlusconi government.

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