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Today, Italy is a democratic republic and a developed country with the 20th highest GDP per capita, the 8th-highest Quality-of-life index, and the 20th-highest Human Development Index rating in the world. It is a founding member of what is now the European Union (having signed the Treaty of Rome in 1957), and also a member of the G8 (having the world's 7th largest nominal GDP), NATO, OECD, the Council of Europe, the Western European Union, the Central European Initiative, and a Schengen state. On January 1, 2007 Italy began a two year term as a non-permanent member of the United Nations Security Council.

Excavations throughout Italy reveal a modern human presence dating back to the Palaeolithic period some 200,000 years ago. In the 8th and 7th centuries BC Greek colonies were established all along Sicily and the southern part of the Italian Peninsula. Subsequently Romans refereed to this area as Magna Graecia as it was so densely inhabited by Greeks. Ancient Rome at first a small agricultural community founded circa 8th century BC grew the next centuries into a colossal empire encompassing the whole Mediterranean Sea, in which Ancient Greek and Roman cultures merged into one civilization, so influential that parts of it survive in modern law, administration, philosophy and arts forming the ground where Western civilization is based upon. In its twelve-century existence, it transformed from a republic to monarchy and finally to autocracy. In steady decline since 2nd century AD, the empire finally broke into two parts in 285 AD, a western and an eastern. The western part under the pressure of Goths finally dissolved leaving the Italian peninsula divided into small independent kingdoms and feuding city states for the next 14 centuries, and the eastern part as the sole heir to Roman legacy.

Following a short recapture of the peninsula by Byzantine Emperor, Justinian at 6th cen. AD from the Ostrogoths a new wave of Germanic tribes, the Lombards, soon arrived to Italy from the north. For several centuries the armies of the Byzantines were strong enough to prevent Arabs, Holy Roman Empire, or the Papacy from establishing a unified Italian Kingdom, but at the same time too weak to fully unify the former Roman lands. Nevertheless during early Middle Ages Imperial orders such as the Carolingians, the Ottonians and Hohenstaufens managed to impose their overlordship in Italy.

Eventually Italy interlocked to its neighboring empires' conflicting interests would remain divided up to 19th century. It was during this vacuum of authority that the region saw the rise of Signoria and Comune. In the anarchic conditions that often prevailed in medieval Italian city states, people looked to strong men to restore order and disarm the feuding elites. In times of anarchy or crisis, cities sometimes offered the Signoria to individuals perceived as strong enough to save the state, most notably Della Scala family in Verona, Visconti in Milan and Medici in Florence.

Italy during this period became notable for its merchant Republics. These city-states, oligarchical in reality, had a dominant merchant class which under a relative freedom nurtured academic and artistic advancement. The four classic Maritime Republics in Italy were Venice, Genoa, Pisa, Amalfi reflecting the temporal sequence of their dominance.

Venice and Genoa were Europe's gateway to trade with the East, with the former producer of the renown venetian glass, whilst Florence was the capital of silk, wool, banks and jewelry. The Maritime Republics were heavily involved in the Crusades, taking advantage of the new political and trading opportunities, most evidently in the conquest of Zara and Constantinople funded by Venice.

During late Middle Ages Italy was divided into smaller city states and territories: the kingdom of Naples controlled the south, the Republic of Florence and the Papal States the centre, the Genoese and the Milanese the north and west, and the Venetians the east. Fifteenth-century Italy was one of the most urbanised areas in Europe and the birthplace of Renaissance. Florence, in particular with the writings of Dante Alighieri (1265–1321), Francesco Petrarch (1304–1374) and Giovanni Boccaccio (c. 1313–1375), as well as the painting of Giotto di Bondone (1267–1337) is considered the center of this cultural movement. Scholars like Niccolò de' Niccoli and Poggio Bracciolini scoured the libraries in search of works of classical authors as Plato, Aristotle, Euclid, Ptolemy, Cicero and Vitruvius.

The Black Death pandemic in 1348 left its mark on Italy by killing one third of the population. The recovery from the disaster led to a resurgence of cities, trade and economy which greatly stimulated the successive phase of the Humanism and Renaissance. In 1494 the French king Charles VIII opened the first of a series of invasions, lasting up to sixteenth century, and a competition between France and Spain for the possession of the country. Ultimately Spain prevailed through the Treaty of Cateau-Cambresis which recognised Spanish dominance over the Duchy of Milan and the Kingdom of Naples. The holy alliance between Habsburg Spain and the Holy See resulted in the systematic persecution of any Protestant movement. Austria succeeded Spain as hegemon in Italy under the Peace of Utrecht. Through Austrian domination, the northern part of Italy, gained economic dynamism and intellectual fervor. The French Revolution and the Napoleonic Wars (1796–1815) introduced the ideas of equality, democracy, law and nation.

The creation of the Kingdom of Italy was the result of the efforts by Italian nationalists and monarchists loyal to the House of Savoy to establish a united kingdom encompassing the entire Italian Peninsula. In the context of 1848 liberal revolutions that swept through Europe an unsuccessful war was declared on Austria. Giuseppe Garibaldi popular amongst southern Italians led the Italian republican drive for unification in southern Italy , while the northern Italian monarchy of the Kingdom of Piedmont-Sardinia whose government was led by Camillo Benso, conte di Cavour, had the ambition of establishing a united Italian state under its rule. The kingdom successfully challenged Austrian Empire in the Second Italian War of Independence with the help of Napoleon III, liberating the Lombardy-Venetia. In 1866 Victor Emmanuel II aligned the kingdom to Prussia during the Austro-Prussian War waging the Third Italian War of Independence which allowed Italy to annex Venice. In 1870, as France during the disastrous Franco-Prussian War abandoned its positions in Rome, Italy rushed to fill the power gap by taking over the Papal State from French sovereignty. Italian unification finally was achieved, and shortly afterwards Italy's capital was moved to Rome.

As Northern Italy, was industrialized and modernized the south, became overcrowded, forcing millions of people to emigrate for a better life abroad. The Sardinian Statuto Albertino of 1848, extended to the whole Kingdom of Italy in 1861, provided for basic freedoms, but the electoral laws excluded the non-propertied and uneducated classes from voting. In 1913 male universal suffrage was allowed. The Socialist Party became the main political party, outclassing the traditional liberal and conservative organisations. Starting from the last two decades of the nineteenth century, Italy developed into a colonial power by forcing Somalia, Eritrea and later Libya and Dodecanese under its rule. During World War I Italy stayed at first neutral, but in 1915, signed the London Pact entering Entente, promised Trento, Trieste, Istria, Dalmatia and parts of Ottoman Empire. During the war, 600,000 Italians died and the economy collapsed. Under the Peace Treaty of Saint-Germain, Italy obtained just Bolzano-Bozen, Trento, Trieste and Istria in a victory defined as "mutilated" by public.

The turbulence that followed the devastations of World War I, inspired by the Russian Revolution, led to turmoil and anarchy. The liberal establishment, fearing a socialist revolution, started to endorse the small National Fascist Party, led by Benito Mussolini. In October 1922 the fascists attempted a coup (the "Marcia su Roma", i.e. March on Rome); but the king ordered the army not to intervene, instead forming an alliance with Mussolini. Over the next few years, Mussolini banned all political parties and curtailed personal liberties thus forming a dictatorship. In 1935, Mussolini subjugated Ethiopia after a surprisingly lengthy campaign. This resulted in international alienation and the exodus of the country from the League of nations. A first pact with Nazi Germany was concluded in 1936, and a second in 1938. Italy strongly supported Franco in the Spanish civil war and Hitler's annexation of Austria and Czechoslovakia.

On April 7, 1939 Italy occupied Albania, a de facto protectorate for decades and entered World War II in 1940 taking part in the late stages of the Battle of France. Mussolini wanting a quick and swift victory which would emulate Hitler's blitzkrieg in Poland and France, invaded Greece in October 1940 via Albania but was forced to a humiliating defeat after a few months. At the same time Italy after initially conquering British Somalia, saw an allied counter-attack leading to the loss of all possessions in the Horn of Africa. Italy was also defeated by British forces in North Africa and was only saved by the urgently dispatched German Africa Corps led by Erwin Rommel. Italy was invaded by Allies in June 1943 leading to the collapse of the fascist regime and the arrest of Mussolini. In September 1943, Italy surrendered. Immediately Germany invaded its former ally with the country becoming a battlefield for the rest of the war. The country was liberated on April 25, 1945.

In 1946 Vittorio Emanuele III's son, Umberto II, was forced to abdicate. Italy became a Republic after a referendum held on June 2, 1946, a day celebrated since as Republic Day. This was the first election in Italy allowing women to vote. The Republican Constitution was approved and came into force on January 1, 1948. Under the Paris Peace Treaties of 1947, the eastern border area was lost to Yugoslavia and the free territory of Trieste was divided between the two states. The Marshall Plan in 1949 helped to revive the Italian economy which in 1950s and 1960s enjoyed a prolonged economic growth. Italy is a founding member of European Union (EU). In the 1970s and 1980s the country experienced the Years of Lead, a period characterised by widespread social conflicts and terrorist acts carried out by extra-parliamentary movements. The assassination of the leader of the Christian Democracy , Aldo Moro, led to the end of a historic compromise between the DC and the Communist Party.

From 1992 to 1997, the Italian economy faced significant challenges with massive government debt, extensive corruption, and organized crime's considerable influence collectively called the political system Tangentopoli. The Tangentopoli scandals involved all major parties, and between 1992 and 1994 the DC underwent a severe crisis splitting up into several factions, including the Italian People's Party and the Christian Democratic Center. The PSI completely dissolved.

The 1994 elections put media magnate Silvio Berlusconi into the Prime Minister's seat. However he was forced to step down in December when Lega Nord withdrew its support. In April 1996, national elections led to the victory of a centre-left coalition under the leadership of Romano Prodi. Prodi's first government became the third-longest to stay in power before he narrowly lost a vote of confidence, by three votes, in October 1998. A new government was formed by Massimo D'Alema, but in April 2000 he resigned. In 2001 the centre-right formed government and Silvio Berlusconi was able to remain in power for a complete five year mandate, but with two different governments. The first one (2001–2005) became the longest government in post-war Italy. Italy participated in the US-led military coalition in Iraq. The elections in 2006 won by centre-left, allowed Prodi to form his second government but in early 2008, he resigned because of the collapse of his coalition. In the ensuing new early elections in April 2008, Silvio Berlusconi convincingly won to form a government for the third time.
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