He’s back.

Fresh off a surprisingly decisive electoral victory, Silvio Berlusconi will be Italy’s prime minister for the third, and perhaps final, time. In power briefly in 1994 and again from 2001 until his defeat in the 2006 elections, Signor Berlusconi has proven himself a veritable phoenix of Italian politics time and again. He now looks poised for a stable—if unremarkable—five years in power.

The First Republic

Italy has long been a victim of its own post-war electoral system. A combination of rigid proportional representation laws and a strong Communist Party produced decades of tottering coalition governments led by the once-dominant Christian Democrats.  Ideological heterogeneity and a desire to keep the Communists out at all costs pushed the Christian Democrats into a kaleidoscope of unstable coalitions, making for constant instability, bickering, and revolving door governments.

In 63 years, there have been no less than 62 separate Italian governments.

But the fall of the Soviet Union and the mani pulite corruption investigations of the early 1990s led to the dissolution of the major post-war Italian political parties. In their place, a new party system and mildly majoritarian electoral rules were adopted, seemingly overnight. 

Former Communists reorganized themselves into a modern left-wing movement and seemed poised to gain power in the 1994 elections. The demise of Italy’s once-dominant parties resulted in an explosion of small parties of all ideological hues, none strong enough to challenge the resurgent ex-communists. 

Enter Silvio Berlusconi

Just months ahead of the 1994 polls, media magnate and owner of A.C. Milan, Silvio Berlusconi announced the creation of a political movement with a pledge to “stop the communists”. He named his party Forza Italia after a popular football chant, and presented a center-right coalition with the “post-fascist” National Alliance and the populist and regionalist Northern League.

Promising Italians that they too could become as rich as he, a self-made billionaire, Berlusconi led his coalition to victory and entered the Chigi Palace in 1994.

Yet, just seven months into his term, bickering prompted the Northern League to withdraw its support for the government. Berlusconi was forced to resign and went on to lose the 1996 elections to a center-left coalition led by Romano Prodi.

Berlusconi bode his time on the opposition benches, only to re-emerge as candidate for prime minister in the 2001 elections. Having patched over differences with the Northern League and folded several micro-parties into his center-right coalition, Berlusconi campaigned for the premiership on a largely liberal platform. His manifesto, Contract with the Italian People, was a shameless copy of the document popularized by Newt Gingrich but an effective tool nevertheless. Once again, Mr. Berlusconi was elevated to the premiership.

His second stint was most notable for its length. Berlusconi became the first post-war prime minister to last an entire five-year term in office. Yet, the multitude of parties within his coalition caused frequent headaches and enough paralysis to prevent any serious liberalization of the economy. 

His tenure was also notable for inappropriate and often obscene public gaffes. He caused a diplomatic rift with Spain after seemingly intimating that the foreign minister was a cuckold, and with Germany after comparing one of its MEPs to a Nazi concentration camp guard. 

Indeed, Berlusconi’s term in office was largely unremarkable. His government failed to pass major economic reforms or curb rising public debt. Accordingly, his center-right coalition lost the 2006 elections, albeit narrowly, to a resurgent center-left again led by Romano Prodi.

Prodi II, PD, and the PDL

Unfortunately for Mr. Prodi, he would last less than two years in the job. New proportional-based electoral rules put in place in the twilight of the Berlusconi government, along with a strong last-minute surge in support for the center-right, left Prodi with a wafer-thin majority in the Senate. His unwieldy nine-party coalition, ranging from moderate Catholics to unreformed communists, lurched from one crisis to the next, often held hostage by just one or two senators from a minor party. 

While the second Prodi government was just as unremarkable, if not more so, than the center-right administration that proceeded it, Romano Prodi’s greatest legacy is likely to be his dogged determination to create a single party of the center-left capable of governing for a full term. The Democratic Party (PD), an amalgam of the mainstream elements within the Prodi coalition, was born in October 2007 with Rome Mayor Walter Veltroni elected as its first leader.

The withdrawal of a tiny centrist grouping on a largely peripheral issue in January 2008 led to the collapse of the Prodi government and fresh elections. Prodi announced that he would not stand for another term, while Veltroni pledged to run for prime minister without the support of the minor far-left and centrist elements that had ruined Mr. Prodi and refused to join the PD.

This accelerated Berlusconi’s long-held desire to merge the constituent components of his coalition into a single party as well. The Northern League rejected the idea out of hand, and the proposal received a cool reception amongst other parties as well.  Nevertheless, Mr. Berlusconi announced that the largest blocs in his coalition, Forza Italia and the National Alliance, would run under a joint list—the People of Freedom (PDL). Several parties eventually joined the new party and the Northern League agreed to run in coalition.

The PDL held a commanding lead in opinion polls from the beginning, although Veltroni’s PD managed to narrow the gap as the campaign progressed. Both men espoused almost identical political platforms of tax cuts and fiscal discipline. Specifics were conspicuous in their absence. 

The campaign also turned on some strange issues, including the government’s failure to properly collect trash in Naples and the stop-start erection of a bridge over the Straits of Messina. Mr. Berlusconi even sounded protectionist notes to the left of Veltroni, opposing the incumbent government’s plans to sell Italy’s flagship (and bankrupt) airline Alitalia.

Narrowing opinion polls and the possibility that three political groupings (of the far-left, center, and far-right, respectively) independent of the main blocs could enter the legislature raised concerns of a hung parliament or another Senate micro-majority.  Compromise prime ministerial candidates and talks of a grand coalition along the lines of the Merkel government in Germany were floated in private. All of this was denied by both main candidates, sometimes to theatric effect.

In the end there would be no worries of a split legislature. The People of Freedom stormed to a convincing majority in both chambers of parliament. Fears of another government crisis in the Senate were allayed, although Berlusconi will once again have to rely on the Northern League’s support. The League nearly doubled its take of the vote and will no doubt expect considerable influence over the incoming government.

Even Veltroni experienced a victory of sorts in defeat, picking up a respectable number of seats in an election considered unwinnable for the Democrats. Perhaps more importantly for his party, the radical left that had harassed Mr. Prodi was surprisingly swept out of parliament for the first time in decades. Should Mr. Veltroni keep his party together, he is likely to be a strong competitor in the next election.  

Stability and Reform

The new parliament appears to be the most stable one for Italy in years. Berlusconi’s PDL, with the Northern League and another minor regional party, commands a strong majority in both houses. The opposition Democrats, allied with just a single additional coalition party, will be a cohesive and coherent opposition. And a new independent centrist grouping is so small that it is unlikely to play more than a bit part over the next five years. 

After years of instability, the move towards a two-party system in Italy appears to be finally taking shape. 

This is, no doubt, welcoming news for the incoming prime minister. The challenges facing Berlusconi are numerous, serious, and urgent. Italy’s economy has consistently underperformed its Eurozone partners and is currently recording near-zero growth. It is also one of the most uncompetitive nations with a bloated public sector, inflexible labor rules, and spiraling public debt. The EU’s statistical office recently announced that Spain had overtaken Italy in terms of per capita GDP, and the country risks slipping even further behind its peers.  

Of course, that assumes that the new government does not undertake deep liberal reforms, measures that are likely to be as unpopular as they are necessary. Mr. Berlusconi has frequently expressed admiration for Margaret Thatcher and has sounded notes of Thatcherism over the years. But his past actions show a history of backing down in the face of political pressure. His new party and strong mandate will certainly give him a firmer hand if he chooses to tackle Italy’s most pressing problems. Majority opinion, however, holds that his desire to be popular will override his sense of political duty. He is also rumored to be seeking the largely ceremonial presidency to round out his political career—a position not typically awarded to the politically bold.

Another outstanding issue for the Berlusconi government will be electoral reform. The surprisingly stable election results came in spite of the proportional rules enacted by his last government, not because of them. As the clamor grows louder for an electoral system along the lines of Germany or even Britain, Berlusconi’s administration may seek a compromise proposal with Veltroni’s Democrats. Just as the PD is glad to be rid of the far-left, so may Berlusconi be ready to find a way to exclude the often erratic Northern League from future parliaments. 

Silvio’s Opportunity

There is no doubt that Silvio Berlusconi is an eternally fascinating figure. His media empire and fortune are the result of his hard work and determination, although often also the focus of corruption inquiries. His charm, charisma, and wit are undeniable. And while his immodesty—comparing himself to Jesus Christ, for instance—and raw machismo—accusing Spain’s incoming government of being “too pink”—would certainly make him unelectable in many European countries, the Berlusconi buffoonery is simply part of the outsider image that he has created for himself. After all, this is the same man who has run for prime minister in every election since 1994, making him undoubtedly a member of the establishment.   

The reemergence of Berlusconi has raised many eyebrows in Europe. Most EU governments were glad to see him replaced with Romano Prodi, a former European Commission President, in 2006. His committed Atlanticism and mild Euroscepticism have never gone down well with the Brussels establishment, but they are likely to have five more years of Signor Berlusconi just the same.

Whatever the outcome of Silvio Berlusconi’s third and final turn at the helm, he will, no doubt, be remembered as among the most colorful of Italy’s innumerable post-war leaders. Perhaps, instead of becoming president, he would like to be known as its most daring reformist as well.

Will Il Cavaliere ride to Italy’s rescue at her most critical moment? For the71-year old Berlusconi, it is likely to be his last chance.