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Analysis: Italy's politics turned upside down by election aftermath

Former Italian Prime Minister Silvio Berlusconi (C ) is pictured as a translator repeats remarks by former U.S. president George W. Bush (no
Former Italian Prime Minister Silvio Berlusconi (C ) is pictured as a translator repeats remarks by former U.S. president George W. Bush (no

By Barry Moody

ROME (Reuters) - Five months ago, Silvio Berlusconi was in steep decline and his party was in shambles. His center-left enemies looked triumphant and sat on a 15-point opinion poll lead.

Today that situation has turned 180 degrees. The center-left is devastated by divisions and the 76-year-old media tycoon has an opinion poll lead ranging from five to eight points.

The extraordinary upset is the result of powerful aftershocks from an electoral earthquake in February when the populist 5-Star Movement swept up a huge protest vote against Italy's politicians and grabbed an unprecedented 25 percent to become the third force in parliament.

Now that the dust is starting to settle with the inauguration of a new broad-based coalition government led by center-left politician Enrico Letta, it is possible to see more clearly the winners and losers from one of the most turbulent periods in recent Italian political history.

One of the winners is Berlusconi.

He has gone from a pale, indecisive figure last autumn to a position of strong influence over Letta's government, helped greatly by the implosion of the center-left and his own astonishing resurgence since he was forced from power in November 2011 as Italy faced a major financial meltdown.

The four-times former premier's unrivalled political and communication skills, despite the reputational damage from a string of sex and corruption scandals, are in stark contrast to the bungles of hapless center-left leader Pier Luigi Bersani.

Berlusconi had consistently said since the election that a grand coalition was the only way out of a vote that ended with parliament divided three ways and no group able to govern alone.

He was also one of those pushing hardest for the re-election of President Giorgio Napolitano against the 87-year-old head of state's own wishes, as the only way to end a two-month impasse since the election.

Berlusconi's loyal protégé Angelino Alfano is Letta's deputy and the billionaire businessman has effective power of life and death over the government, giving him strong leverage to push through the center-right's policies led by abolition of a hated housing tax.

In his inaugural speech on Monday, Letta quickly nodded to this demand by blocking the next installment of the tax in June although he did not commit to abolishing it.

"Berlusconi can kill the government from one day to the next," respected commentator Sergio Romano told Reuters.

This power is not unqualified, however.

Berlusconi has resisted heavy pressure from his own party hardliners to go straight to elections, because doing so with the current flawed electoral law could end up with him in the same situation as the center-left, which won a whisker thin majority in February but was then left unable to rule.

In addition, Berlusconi seems intent on projecting an image of statesmanlike restraint and responsibility.

The electorate is bitterly angry at the economic pain of a deep recession and demands immediate action to relaunch the economy rather than a return to uncertainty and electioneering.

Romano says Berlusconi has also not given up his ambition to be the next Italian president, with Napolitano very unlikely to continue for a full 7-year term.

BERSANI IS BIG LOSER

Undoubtedly the biggest loser is the colorless and uninspiring Democratic Party (PD) leader Bersani, who has resigned after seeing party rebels sabotage his two choices for president.

Bersani had already thrown away a commanding lead before the election and then obstinately pursued a policy of forging an alliance with Grillo, despite repeated rebuffs.

Bersani's problem is at the core of why the center-left is falling apart. Its former communist left wing would not swallow the idea of allying with its traditional enemy Berlusconi and although it is now apparently reconciled to the Letta government, the party could still collapse at any time.

The biggest winner of all is President Napolitano, who has succeeded in fending off further uncertainty in a snap new election and installing the coalition government he wanted as a bulwark against Grillo's anti-establishment party.

"Napolitano has been decisive. If it had not been for him we would now be in a major constitutional crisis," Professor Gianfranco Pasquino of Johns Hopkins University told Reuters.

The former communist, dubbed "King George", has reinforced his status as Italy's most popular politician by far.

The whole formation of the Letta government is down to Napolitano's protection and the assurances he wrung from the parties in exchange for his agreement to stay on as president.

Castigating politicians for their failures in his own inaugural speech a week ago, Napolitano clearly threatened to resign if they did not act responsibly and form a government.

Beppe Grillo's storming success in February's election may have been diluted since, although he remains a danger to the traditional politicians.

A series of missteps during the latest stage of the crisis, including some ill-judged inflammatory statements, may have lost him support and the formation of a credible government by establishment parties looks like a setback for him.

"Grillo is now sliding towards the losing side because he has not really used the parliamentary power he has in a very skilful way ... he is losing popularity. It is not a good moment for him," Pasquino said.

Success by Letta could further undermine Grillo.

Letta, 46, has always operated very much out of the limelight but he is a respected, pro-European politician from the Democratic Party's right wing and his government does appear to meet many of the electorate's demands for change.

He is the third youngest Italian prime minister, and his cabinet line-up has an average age of 53 in contrast to the much older composition of most governments. It also has a record number of 7 women ministers out of 21.

It contains many lesser known faces, meeting voters' demands for the end of dominance by a corrupt political "caste."

If Letta succeeds in maintaining unity in the uncomfortable left-right coalition, pushes through pro-growth policies, repeals the electoral law and makes other vital constitutional changes, he could pick up powerful momentum that would be bad news for Grillo.

"I am convinced Grillo's votes are borrowed votes, protest votes, votes denied to somebody else. If the government does well, if the situation improves, if they change the trend of unemployment and Letta gains popularity, Grillo's votes will melt away," Romano said.

Letta's momentum could also be bad news for Florence mayor Matteo Renzi, 38, who had seemed set to be the center-left's candidate in new elections but faces a far more difficult potential target in Letta than Bersani, as long as the new prime minister survives.

While Renzi remains a potential game changer as a dynamic and articulate politician, he may now have to wait longer before he can move to center-stage although he is still in pole position to take over the PD leadership from Bersani at a vote in the autumn.

(Editing by Giles Elgood)

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