A new year and a halfway house; just over two-and-a-half years have passed since Silvio Berlusconi became prime minister and if all goes according to plan, the next elections will be in spring 2006. Certainly Berlusconi has every intention of staying the course and of standing for election for another five-year term as head of government. At a Christmas press conference, he declared boldly that he was good for another 15 years in politics.

Berlusconi also had no doubts that Italys presidency of the European Union had been a resounding success and that his governments programme was right on track. This is hardly true. The presidency was almost universally rubbished by both press and otherwise diplomatic politicians. A fiasco but not a disaster, was the best that Chris Patten, one of the British European Commissioners, could manage, while publications from Newsweek to LExprss and El Pais all reckoned that the six-month Italian presidency had been a failure.

Economically, all indicators show that recovery is still a long way off, and the recent collapse of the Parma-based dairy products and food company Parmalat, after a multi-billion euro hole was discovered in its accounts, confirms everyones worst prejudices about Italian business reliability. So far it is not clear whether any politicians are involved in the scandal, and as it seems that the fraud began 15 years ago there can be no direct blame laid at this governments doorstep. But the relaxation of penalties for false accounting passed by this parliament and the court convictions of some Berlusconi employees for bribing tax officials do not enhance Italys image, or the prime ministers.

Berlusconi has even faltered in his efforts to protect himself and his businesses, with two major setbacks in the past couple of months. First, although he was able to have a media reform bill passed through parliament just in time to save his own television channel Rete 4 from having to cease terrestrial broadcasting, the president of the republic Carlo Azeglio Ciampi refused to sign the so-called Gasparri bill on the grounds that it was unconstitutional.

Then in mid-January Italys constitutional court ruled that a law granting immunity to the countrys top five state officials including the prime minister was illegitimate. The law, passed by parliament last June, brought to a halt the trial of Berlusconi in Milan on charges of corruption. His co-defendant, Cesare Previti, whose trial continued separately, was sentenced to five years in prison for corruption last November. Berlusconis trial will now re-start in front of a new panel of judges in Milan, probably within a couple of months.

The heart of the problem is, as ever, the prime ministers conflicts of interest and a bill to regulate this problem is due back in parliament in the next few weeks. The measure as it stands is toothless but the debate will once again focus attention on a subject Berlusconi would rather forget.

One of the governments coalition partners, the Lega Nord, has again been threatening action if no concrete steps are taken towards devolution. It is the one issue that the partys leader Umberto Bossi holds sacred. He wants to see regional governments control schooling and some aspects of public order and he wants this to happen in a big and well-publicised way. The regions do have much greater responsibilities (including fiscal ones) than a decade ago, but the process has been a gradual one, quite inadequate for a leader who takes as his symbol Alberto da Giussano, a mediaeval knight with sword drawn and shield thrust forward.

There has been talk of a cabinet reshuffle, which Berlusconi has stoutly denied, but if the rift with Bossi becomes serious some ministers may be changed after the ritual of a verifica in parliament, the verification or confirmation of who really supports the government and under what conditions.

In foreign affairs, the mandate to keep Italian troops deployed in Iraq will come up for renewal soon. If there are no more Italian deaths and if the occupation appears to be bringing stability to the country, there will be little difficulty in obtaining the necessary votes. But if there are more casualties or if the cost of keeping the military in Iraq increases, then there will be more problems for the government.

These are all short-term issues to be faced over the next few months. In the medium term Berlusconi must brace himself for serious losses in the European and local elections scheduled in June.

In any other country, all of these problems could be shrugged off as a normal, mid-term depression. Governments expect to go through a trough before rising again to what they hope will be a second term. But Italy has never had a government which has lasted for a full legislature and Berlusconi is already approaching the record. In this sense he has done very well, aided by the not-so-secret weapon of a deeply divided opposition, always happier cutting itself to pieces than laying into the government.

However, Romano Prodi, head of the European Commission, has promised that he will be back to lead a new, united centre-left alliance. So although Berlusconi is not under any immediate threat, and may still break the political longevity records, the trough might be long and deep.

Picture: Silvio Berlusconi with European Commission president Romano Prodi, who has promised to return to Italy to lead the opposition alliance.