He was the Prime Minister of Italy from 1983 to 1987, and head of the Italian Socialist Party from 1976 to 1993. He revitalized the party, which had been troubled by factionalism, and tried to distance it from the communists so that it could participate in coalitions with Christian democrats and other parties. The party reached its height when it increased its share of votes in the general election of 1983, after abandoning the coalition with the Christian democrats.
During his primeministership, Italy become the 5th largest industrial nation and gained entry into the G-7. Inflation was tamed and GDP grew steadily. Perhaps, he is best remembered internationally when in October 1985 he stood up to Ronald Reagan and American. Following the highjacking of the Achille Lauro cruise ship, the highjackers, after protracted negociations, were given safe passage to Egypt by plane. A squadron of USAF plane forced the plane down to the US military base of Sigonella. Thought the Americans pretended from the Italian authorities that they extradite Mahmoud Abbas (PLO), Craxi stood firm on the grounds that the the Italian Government has jurisdiction over its own territory (Sigonella is in Italy) and cannot rennege its word. Craxi order elite Italian troops to surround the plane protecting it from US military.
This episode earner him an article on the Economist titled "Europe's strong man " and more tellingly, in the Senate, a full-standing ovation which included his communist arch-ennemies.
Though he was one of the longest-serving prime ministers in Italian history, he was discredited by corruption charges during the mani pulite (Italian for clean hands) police investigation. His party was utterly destroyed, falling from 20% to almost 0% of votes.
During this period, Craxi was the first to expose in the Senate the fact that all parties needed and took money however they could get it to finance their activities. When he asked if anyone had never taken any money to finance his party, not a senator or party-head stood-up.
Like most countries in the world the US and USSR vied for regional influence, and Italy was no exception. While the USSR financed the PCI (Partito Comunista Italiano) - it has been reported at the level of $1 million per week (please double check) - the US backed right, centre and moderate-left parties including the PSI (Partito Socialista Italiano). Interestingly, the Mani-pulite was highly skewed against the Socialists and Bettino Craxi in particular. Comunist and Christian Democrat leaders were left mostly undisturbed. The most public figure of mani-pulite, Antonio di Pietro, was himself the subject of investigations for kickbacks.
He moved to Tunisia in 1994, and there lived until his death from diabetes complications. He repeatedly declared himself innocent, but never returned to Italy where an arrest warrant was waiting for him.
In 2003, for a second time, has stated that the Italian judiciary enquiry was in breach of the European Court for Human Rights statutes (http://www.echr.coe.int).