Though Prime Minister Silvio Berlusconi has yet to officially concede defeat, farewell speeches cannot come soon enough. Perennially one of Europe's weakest links, Italy must overcome its political and economic woes.
The corruption that has plagued Berlusconi's administration must come to an end in order for Italy to remain relevant. In his time leading Italy, Berlusconi was better known for his media empire and bribery charges than for any concrete policy.
His media ownership, rife with conflicts of interest with his role as prime minister, presents an appalling case of abuse of executive power. Furthermore, he is consistently accused of bribing witnesses, and has changed laws numerous times to avoid punishment.
These embarrassments are unlikely to continue, however, as Romani Prodi has managed to defeat Berlusconi by a wafer-thin margin, and has additionally received the backing of Italy's highest court. Though Berlusconi has avoided legal battles in the past, aides suggest that he will accept a loss in this one.
Considering its poor economic performance compared to the rest of Europe, Italy is in dire need of reform. Italy is one of the few modern western European countries that produces the same type of typically labor-intensive goods as developing countries, and has thus been under increasing pressure from nations such as China.
Under Berlusconi's tenure, Italy's financial situation has only deteriorated: National debt remains over 100 percent of GDP, a significantly higher level than those of the country's peers.
While all of the major European countries have hit weak spots, it is important for them to help support each other, particularly with linked monetary destinies. With their economies tied together, European nations must build on the potential of the European Union (EU).
Prodi represents the best opportunity for Italy to recover. There is a desperate need for jobs and a transformation of the industrial sector in the country. The EU will flourish if there is the possibility for cross-border labor movement and pooled resources.
As commissioner of the EU, Prodi introduced the unsuccessful Bolkestein directive, which would have allowed far greater labor mobility for newly joined countries. Prodi will have to build on his background as an economics professor in order to apply practical solutions to Italy's litany of problems.
But Prodi and other Italian legislators must be aware of the enormous risks and potential stumbling blocks they face. Though Prodi will be able to work with the EU, his dreams of federal Europe are far off, and are not necessarily in Italy's best interest.
While there are many problems facing Italian politicians, the only solution will be to attempt reform. In the face of skyrocketing budget deficits and declining competitiveness, a solution needs to be tried quickly. If Prodi does not take a firm stance and begin a thorough process, Italy will risk declining further.
