Silvio Berlusconi tenders his resignation as Prime Minister of Italy, effective November 16, due in large part to the European sovereign debt crisis.
The European debt crisis, often also referred to as the eurozone crisis or the European sovereign debt crisis, is a multi-year debt crisis that took place in the European Union (EU) from 2009 until the mid to late 2010s. Several eurozone member states (Greece, Portugal, Ireland, Spain, and Cyprus) were unable to repay or refinance their government debt or to bail out over-indebted banks under their national supervision without the assistance of third parties like other eurozone countries, the European Central Bank (ECB), or the International Monetary Fund (IMF).
The eurozone crisis was caused by a balance-of-payments crisis, which is a sudden stop of foreign capital into countries that had substantial deficits and were dependent on foreign lending. The crisis was worsened by the inability of states to resort to devaluation (reductions in the value of the national currency). Debt accumulation in some eurozone members was in part due to macroeconomic differences among eurozone member states prior to the adoption of the euro. The European Central Bank adopted an interest rate that incentivized investors in Northern eurozone members to lend to the South, whereas the South was incentivized to borrow because interest rates were very low. Over time, this led to the accumulation of deficits in the South, primarily by private economic actors. A lack of fiscal policy coordination among eurozone member states contributed to imbalanced capital flows in the eurozone, while a lack of financial regulatory centralization or harmonization among eurozone states, coupled with a lack of credible commitments to provide bailouts to banks, incentivized risky financial transactions by banks. The detailed causes of the crisis varied from country to country. In several countries, private debts arising from a property bubble were transferred to sovereign debt as a result of banking system bailouts and government responses to slowing economies post-bubble. European banks own a significant amount of sovereign debt, such that concerns regarding the solvency of banking systems or sovereigns are negatively reinforcing.The onset of crisis was in late 2009 when the Greek government disclosed that its budget deficits were far higher than previously thought. Greece called for external help in early 2010, receiving an EUIMF bailout package in May 2010. European nations implemented a series of financial support measures such as the European Financial Stability Facility (EFSF) in early 2010 and the European Stability Mechanism (ESM) in late 2010. The ECB also contributed to solve the crisis by lowering interest rates and providing cheap loans of more than one trillion euro in order to maintain money flows between European banks. On 6 September 2012, the ECB calmed financial markets by announcing free unlimited support for all eurozone countries involved in a sovereign state bailout/precautionary programme from EFSF/ESM, through some yield lowering Outright Monetary Transactions (OMT). Ireland and Portugal received EU-IMF bailouts In November 2010 and May 2011, respectively. In March 2012, Greece received its second bailout. Both Spain and Cyprus received rescue packages in June 2012.Return to economic growth and improved structural deficits enabled Ireland and Portugal to exit their bailout programmes in July 2014. Greece and Cyprus both managed to partly regain market access in 2014. Spain never officially received a bailout programme. Its rescue package from the ESM was earmarked for a bank recapitalisation fund and did not include financial support for the government itself. The crisis has had significant adverse economic effects and labour market effects, with unemployment rates in Greece and Spain reaching 27%, and was blamed for subdued economic growth, not only for the entire eurozone but for the entire European Union. It had a major political impact on the ruling governments in 10 out of 19 eurozone countries, contributing to power shifts in Greece, Ireland, France, Italy, Portugal, Spain, Slovenia, Slovakia, Belgium, and the Netherlands as well as outside of the eurozone in the United Kingdom.
Silvio Berlusconi ( BAIR-luu-SKOH-nee; Italian: [ˈsilvjo berluˈskoːni] (listen); born 29 September 1936) is an Italian media tycoon and politician who served as Prime Minister of Italy in four governments from 1994 to 1995, 2001 to 2006 and 2008 to 2011. He was a member of the Chamber of Deputies from 1994 to 2013 and has served as a Member of the European Parliament (MEP) since 2019, and previously from 1999 to 2001.
Berlusconi is the controlling shareholder of Mediaset and owned the Italian football club A.C. Milan from 1986 to 2017. He is nicknamed Il Cavaliere (The Knight) for his Order of Merit for Labour, although he voluntarily resigned from this order in March 2014. In 2018, Forbes magazine ranked him as the 190th richest man in the world with a net worth of US$8.0 billion. In 2009, Forbes ranked him 12th in the List of The World's Most Powerful People due to his domination of Italian politics, throughout more than twenty years at the head of the centre-right coalition.Berlusconi was Prime Minister for nine years in total, making him the longest serving post-war Prime Minister of Italy, and the third longest-serving since Italian unification, after Benito Mussolini and Giovanni Giolitti. He was the leader of the centre-right party Forza Italia from 1994 to 2009, and its successor party The People of Freedom from 2009 to 2013. Since November 2013, he has led a revived Forza Italia. Berlusconi was the senior G8 leader from 2009 until 2011 and he currently holds the record for hosting G8 Summits (having hosted three Summits in Italy). After serving nearly 19 years as a member of the Chamber of Deputies, Italy's lower house, after the 2013 general election he became a member of the Senate.
On 1 August 2013, he was convicted of tax fraud by the court of final instance, the Court of Cassation, confirming his four-year prison sentence (of which three years are automatically pardoned) along with a public office ban for two years. As his age exceeded 70 years, he was exempted from direct imprisonment, and instead served his sentence by doing unpaid social community work. Because he had been sentenced to a gross imprisonment for more than two years, a new Italian anti-corruption law led to the Senate expelling and barring him from serving in any legislative office for six years. Berlusconi pledged to stay leader of Forza Italia throughout his custodial sentence and public office ban. After his ban ended, Berlusconi ran for and was successfully elected as an MEP at the 2019 European Parliament election.Berlusconi was the first person to assume the premiership without having held any prior government or administrative offices. He is known for his populist political style and brash personality. In his long tenure, he was often accused of being an authoritarian leader and a strongman. Berlusconi still remains a controversial figure who divides public opinion and political analysts. Supporters emphasize his leadership skills and charismatic power, his fiscal policy based on tax reduction, and his ability to maintain strong and close foreign relations with both the United States and Russia. In general, critics address his performance as a politician, and the ethics of his government practices in relation to his business holdings. Issues with the former include accusations of having mismanaged the state budget and of increasing the Italian government debt. The second criticism concerns his vigorous pursuit of his personal interests while in office, including benefitting from his own companies' growth due to policies promoted by his governments, having vast conflicts of interest due to ownership of a media empire with which he has restricted freedom of information and finally, being blackmailed as leader because of his turbulent private life.