Craxi led the one of longest-lived governments of Italy during the republican era and had strong influence in Italian politics throughout the 1980s; for a time, he was a close ally of two key figures of
Christian Democracy,
Giulio Andreotti and
Arnaldo Forlani, in a loose cross-party alliance often dubbed CAF (from the first letter of the surname
Craxi-
Andreotti-
Forlani). Craxi had a firm grasp on a party previously troubled by factionalism, and tried to distance it from the Communists and to bring it closer to Christian Democrats and other parties; his objective was to create an Italian version of European reformist socialist parties, like the German
SPD or the French
Socialist Party. The Italian Socialist Party reached its post-war apex when it increased its share of votes in the general election of 1987. However, the Italian Socialist Party never outgrew the much larger
Italian Communist Party, whose highly charismatic leader,
Enrico Berlinguer, was a fierce adversary of Craxi's policies through the years. The main dynamic of Italian post-war politics was to find a way to keep the Italian Communist Party out of power. This led to the constant formation of political alliances between parties keen on keeping the Communists at bay. Things were further complicated by the fact that many parties had internal currents that would have welcomed the Communists in the governing coalition, in particular, within Christian Democracy, the largest party in Italy from 1945 until the end of the
First Republic.
Domestic policy During Craxi's tenure as Prime Minister, Italy became the fifth largest industrial nation and gained entry into the
G7 Group of most industrialised nations. However, inflation was often in the double digits. Against trade union resistance, the Craxi government reacted by abolishing wage-price
indexation (a mechanism known as
scala mobile or "escalator"), under which wages had been increased automatically in line with inflation. Abolishing the escalator system did help reduce inflation, which was also falling in other major countries, but in the long term it inevitably increased industrial action as workers had to bargain for better salaries. In any event, the victory of the "No" campaign in the referendum called by the
Italian Communist Party was a major victory for Craxi. During his premiership, the Socialist Party gained popularity. He successfully boosted the country's
GNP and controlled
inflation. In domestic policy, a number of reforms were initiated during Craxi's time in office. In 1984, solidarity contracts (work-sharing arrangements to avoid redundancies) were introduced, while restrictions on part-time employment were relaxed. In the field of family welfare, legislation was enacted in 1984 and 1986 that changed the family allowance system "so that people most in need received larger amounts and coverage was progressively reduced to the point of termination once certain income levels were exceeded."
Concordat with the Vatican In 1984, Craxi signed an agreement with the
Vatican City State that revised the
Lateran Treaty of 1929. Among other things, both sides declared: "The principle of the Catholic religion as the sole religion of the Italian State, originally referred to by the Lateran Pacts, shall be considered to be no longer in force". The Church's position as the sole state-supported religion of Italy was also ended, replacing the state financing with a personal income tax called the
otto per mille, to which other religious groups, Christian and non-Christian, also have access. The revised concordat regulated the conditions under which civil effects are accorded to church marriages and to ecclesiastical declarations of nullity of marriages. Abolished articles included those concerning state recognition of knighthoods and titles of nobility conferred by the Holy See, the undertaking by the Holy See to confer ecclesiastical honours on those authorized to perform religious functions at the request of the State or the Royal Household, and the obligation of the Holy See to enable the Italian government to present political objections to the proposed appointment of diocesan bishops. Craxi was not a Catholic: he defined himself as a "laical Christian, like Giuseppe Garibaldi."
Foreign policy (1978) In the international arena, Craxi helped dissidents and Socialist parties throughout the world to organise and become independent. Notable recipients of his logistical help were the
Spanish Socialist Workers' Party (PSOE) during
Francisco Franco's dictatorship and dramatist Jiři Pelikan, in the former
Czechoslovakia. Rare footage of Craxi trying to lay flowers at the tomb of
Salvador Allende has been unearthed from
RAI's (Radiotelevisione Italiana) archives. There is also evidence that part of Craxi's illegally earned money was given in secret to leftist political opposition in Uruguay during the military dictatorship, to
Solidarity in the period of
Jaruzelski rule in Poland and to
Yasser Arafat and his
Palestine Liberation Organization because of Craxi's sympathy for the
Palestinian cause. He also played a role in the 1987 seizure of power in Tunisia by
Zine el Abidine Ben Ali.
Sigonella crisis Internationally, Craxi is perhaps best remembered for an incident in October 1985, when he refused the request of US President
Ronald Reagan to extradite the hijackers of the cruise ship
Achille Lauro. After protracted negotiations, the hijackers were given safe passage to
Egypt by plane. Three
United States Navy F-14's forced the plane down to the United States Naval Air Facility (NAF) of
Sigonella. According to the version of political circles in Washington, Craxi first gave the United States Forces permission to detain the terrorists, but he later reneged on the deal. He ordered Italian troops to surround the US Forces protecting the plane. This move was supposedly dictated both by security concerns about terrorists targeting Italy if the United States had had it their way and by the Italian tradition of diplomacy with the
Arab world. Craxi's decisive character may have been relevant in this resolution. Though the Americans demanded that the Italian authorities extradite
Abu Abbas of the
PLO, Craxi stood firm on the grounds that the crime had been perpetrated on Italian soil, over which the Italian Republic had sole jurisdiction. Craxi rejected the US
extradition order and let
Abu Abbas – chief of the hijackers, present on the plane – flee to
Yugoslavia; the four hijackers were later found guilty, and sentenced to prison terms for hijacking and the murder of a
Jewish American citizen,
Leon Klinghoffer. Abbas was later also convicted in Italy
in absentia and eventually died of "natural causes", shortly after being taken prisoner by American forces in the aftermath of the
2003 invasion of Iraq. This episode earned Craxi an article in
The Economist titled "Europe's strong man" and a standing ovation in the
Senate of the Republic, which included his Communist opponents.
US attack on Libya According to
Giulio Andreotti, Italy's foreign minister at the time (and 42nd Prime Minister of Italy) and
Abdel Rahman Shalgham (Libya's Foreign Minister from 2000 until 2009), Craxi was the person who telephoned Libyan leader
Muammar al-Gaddafi to
warn him of the impending American
Operation El Dorado Canyon retaliatory air-strikes against Libya on 15 April 1986. This permitted Gaddafi and his family to evacuate their residence in the
Bab al-Azizia compound moments before the bombs dropped. Shalgham's statement was also confirmed by
Margherita Boniver, foreign affairs chief of Craxi's Socialist Party at the time. For the Libyan attack, Craxi's government denied the United States any rights of military overflight, as did France and Spain. For the United States, this precluded the use of European continental bases, forcing the US Air Force component to take off from
RAF Upper Heyford,
United Kingdom, be flown around France and Spain, over Portugal and through the
Straits of Gibraltar, adding 1,300 miles (2,100 km) each way and requiring multiple aerial refuellings.
Resignation In April 1987, the Secretary of the Christian Democracy
Ciriaco De Mita decided to drop his support for
Craxi's government. This caused the immediate fall of the cabinet and the formation of a new government led by the long-time Christian Democratic politician
Amintore Fanfani. Even though Fanfani was a close friend and ally, Craxi did not participate in the swearing in ceremony, sending the Undersecretary to the Presidency of the Council
Giuliano Amato. == After the premiership ==