Analysis: What Silvio Berlusconi gets up to next could define Italy's prospects for years to come Silvio Berlusconi, Italy's three-time prime minister and dominant politician for two decades, has now been convicted and sentenced to four years in prison - since reduced to one year. But few people in Italy - or in Europe - believe Berlusconi will fade from Italian, or European, politics anytime soon. Just a few days ago, he declared his intention to remain involved though not to run for the premiership for a fourth time. Whatever role he chooses to play, it is unlikely to be a marginal one. He may not wish to be king again, but he can be a kingmaker, owing to his control of Mediaset, Italy's largest media group. And, given his abysmal popularity ratings, he may decide to play the wild card, embrace a Eurosceptic and anti-government stance, and try to bring down premier Mario Monti's technocratic administration. Mr Monti took over from Berlusconi in November 2011, arriving with a mandate, and parliamentary support, to implement the measures needed to restore market confidence and reassure Italy's eurozone partners and the International Monetary Fund that it was not going down the path taken by Greece. At the time of the G20 summit in Cannes that month, Italy - and Europe - was dangerously close to collapse, with Berlusconi's government deeply divided about the measures needed to bring down debt-service costs. Domestic political deadlock, and Berlusconi's inability to engage with Germany and France resulted in spiralling refinancing costs, with the spread relative to German bunds consistently over 500 basis points between July and November 2011. The Monti government has restored market confidence and Italy's international credibility. But the overall picture remains fragile. Berlusconi advocates an exit from the eurozone and a return to the flexibility of its own currency, which in the past allowed policymakers to boost competitiveness through devaluations. Most experts believe that Italy, instead, needs to learn how to live with the euro and within the eurozone, which means adopting policies that ensure productivity growth and innovation, not currency devaluation, are the main drivers of competitiveness. While the odds still favour a relatively smooth transition, many uncertainties could derail the reform process. In particular, whether Italy will be able to move beyond technocratic politics to a "normal" government remains the outstanding issue. From this perspective, what Berlusconi advocates for Italy, and the consequences of his agenda for the eurozone, is not good news. Any hint that Italy may be locked again in parliamentary inertia, as in the final months of Berlusconi's last government, would push the markets to question the credibility of Italy's fiscal-consolidation plan, jeopardising its ability to refinance its debt, the largest in the eurozone - at roughly €2 trillion (£1.6tn), or 120 per cent of Italy's GDP - which means that Italy can be helped, but not rescued. Paola Subacchi is research director for International Economics at Chatham House.