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Just three months after centre-left Prime Minister Enrico Letta took office at the head of an uneasy alliance with Berlusconi's People of Freedom party (PDL), Italy, the Euro zone's third largest economy, is again mired in uncertainty.
Letta repeated on Friday that Italy must have a stable government, saying the last thing it needs is to be worn down by partisan battles. But everything hangs on the unpredictable reaction of Berlusconi.
The 76-year-old billionaire and his supporters have reacted angrily to his conviction and prison term, the first definitive sentence he has received in dozens of trials during his two decades in politics. While he is unlikely to spend any time in jail due to his age, the verdict was an unprecedented blow and he could lose his seat in Parliament within weeks with a vote on expelling him from the Senate likely in September. He has declared he will continue his political activities under the "Forza Italia" (Go Italy!) name of his first party and press for a reform of the justice system, with speculation growing that his daughter Marina may succeed him as party leader.
So far he has given no indication of wishing to bring the government down and pitch Italy into fresh elections, but the already dim prospects of significant reforms to revive Italy's stagnant economy and cut its massive debt have receded further.
Agreement over thorny issues such as privatisations due in the autumn or the much-disputed IMU property tax which Berlusconi wants to scrap but which would blow a hole in already strained public finances will be difficult.
Berlusconi's definitive conviction for tax fraud opens the way for 12 months of house arrest or community service, as well as sanctions including a ban on running for office for the next six years.
The situation is unprecedented but the rules are the same as for ordinary criminals, law professors told AFP.
Berlusconi will have to make a specific request to do community service in order to avoid house arrest. Taking account of the summer break in the judicial system, this petition will have to be filed by October 16 and must then be examined by a court.
The billionaire could find himself working in an old people's home, stacking shelves in a supermarket or cleaning up graffiti - although this is highly unlikely. He has said he does not want to do community service "like a common criminal" and would therefore most likely be placed under conditions of house arrest. He can choose which of his villas to serve his sentence in, but would probably select his main residence near Milan. There is no chance the 76-year-old tycoon will have to go to prison proper because of lenient rules for over-70s in Italy with short prison sentences, unless he attempts to escape house arrest.
