Agony and the Ecstasy

"I used to think corruption was all on the other side," says Arlacchi, whose political career has always been on the left. While Italy's communists and their political descendents were kept out of power during the cold war, they had high ethical standards and resisted corruption. "But in the last 20 years, it has cut across party lines," says Arlacchi over lunch in one of his favorite Rome restaurants. As if partly to console himself, he notes that Rome's left-wing Mayor Walter Veltroni, the main rival to Berlusconi in the upcoming elections, "says that he will not accept as candidates for Parliament [on his ticket] people who have a felony conviction." Arlacchi paused over the wild strawberries. "I see the expression on your face," he laughed. "But in this country, that's considered a courageous decision for a politician to make." Berlusconi, meanwhile, has been the object of numerous investigations, and only escaped convictions on some charges because the laws were changed when he was in power.

Perhaps it's to be expected that, as sociologist Ilvo Diamanti puts it, "a sterile anger" is the emotion now dominating public life in Italy, and outraged cynicism is the order of the day. With politicians talking mainly to themselves, only artists and entertainers seem to give voice to the mood on the street. The most popular political writer in the country, without question, is comedian Beppe Grillo. On his widely read blog and in public spectacles his diatribes echo the old cry from the American movie "Network": "I'm mad as hell and I'm not going to take it anymore"—and then some. Last September millions of people rallied around the country for Grillo's V-Day (that is, Vaff-Day, or "go f––– yourself," day). "We have nearly 80 crooks in Parliament," Grillo told NEWSWEEK over the phone from his home in Genoa. (Actually there may be more: 24 who have been convicted of various crimes, an additional 57 who have had public legal problems, plus those who've never been caught.) Grillo appeals to the outside world: "Please, invade us. Help us!"

Joking aside, a big part of Italy's problem is that it relied on outside forces too often in the past to save it from internal problems nobody dared address. It's a society so full of bureaucratic impediments and social fractures that "there is freedom only as long as you don't rock the boat," says Andrea Mandel-Mantello, chief executive of the boutique investment bank AdviCorp. Although Italians are famous as entrepreneurs, it's extremely difficult to start an enterprise, or to grow from a midsize business to a big one capable of competing globally. "There is just too much friction," says Mandel-Mantello. "It's like Rollerblading on cobblestones."

At the macroeconomic level, structural reforms are promised repeatedly, then forgotten in a system where opposition political parties, even if they are minuscule, can and do veto any major government initiative. Fiat's Montezemolo—who has headed Cofindustria, the powerful association of business leaders, for the last four years—recalls that Italy raced like crazy to meet the fiscal requirements imposed by the European Union so that it could join the euro zone in 1999. "As soon as we reached the end of the race—finally we are in the euro!—we collapsed," he says, dramatically leaning back on the sofa of his office and throwing his arms up in the air. "We did nothing. There were no fundamental and structural decisions for the future."

Italians have come to see themselves over the years as survivors. In the aftermath of World War II, says Arlacchi, "they had the mentality of people who'd been bombed." Nothing would be as bad as what went before, and it could get a whole lot better. Which it did. The 1950s and 1960s were phenomenally prosperous years of reconstruction. But then came the 1970s, which were years of terror for many Italians—especially for those who had money or were making it. The Red Brigades sowed fear everywhere, sometimes with the collusion of people in government, while gangsters as well as terrorists turned kidnapping into an industry.

The great spurt of Italian optimism in the 1980s coincided with the end of the terror, and the beginning of Italy's pre-eminence marketing world-class luxury brands including Armani and Zegna, Brioni and Valentino, Bulgari, Gucci, Prada and many more. But then, the bottom dropped out of the economy. The political scandals of the early 1990s coincided with financial stability worthy of Argentina. Only the intervention of international institutions staved off economic collapse. "They kept on buying Italian bonds," says Sapelli. "With our history of terrorism a default could have been stained with blood. They saved the country."