Italy’s new government beds in as storm clouds gather

Enrico Letta.JPG

New Italian Prime Minister Enrico Letta will seek parliamentary backing in a confidence vote today (29 April), with severe political and economic problems looming that will test the solidity of his three-party coalition government.

The vote takes place under the shadow of a gun attack on Sunday, in which an unemployed man shot two police officers and a passerby outside the prime minister's office in Rome, as the cabinet was being sworn in at the nearby presidential palace.

Officials said the shooting was an isolated incident but it came amid tensions that have built up in the eurozone's third largest economy after almost two years of acute economic and social crisis.

"This is another sign of despair," said lower house speaker Laura Boldrini. "Politicians have to come back to providing concrete answers to people's needs."

Letta is due to speak in parliament ahead of the confidence vote at 1500 today, in which he can expect the backing of his own centre-left Democratic Party and former prime minister Silvio Berlusconi's centre-right People of Freedom party.

Forced into a coalition with Berlusconi after the centre-left was unable to gather the numbers needed to govern alone after elections in February, Letta has pledged to try to restore confidence in the country's battered political institutions.

He also has promised to address the poverty worsened by a jobless level running at more than 40% among young people in some areas of the country, and dislodge the EU's fixation with budget austerity.

Doubts remain over whether his government will last a full five-year term, but Letta is expected to try to pass at least a few basic reforms quickly, including a change to Italy's much criticized electoral laws and a cut in the parliament's size.

Europhiles get key posts

Letta said he was satisfied with his 21-member team which, he said, included a record number of seven women, including Cecile Kyenge – who is of Congolese origin, and takes the newly-created integration portfolio.

Berlusconi, whose party was given five posts in the government, is expected to pull the strings through PdL secretary Angelino Alfano, the new deputy prime minister and interior minister.

Fabrizio Saccomanni, director-general of the Bank of Italy, was named finance minister and Emma Bonino, a former European commissioner, will be foreign minister.

The centrist Civic Choice, led by caretaker prime minister Mario Monti, was given three positions, including MEP Mario Mauro as defence minister.

Balancing game

Letta’s cabinet was shaped in part as a response to disillusionment with political elites, evinced by the success of the anti-establishment 5-Star Movement led by comic Beppe Grillo.

He will need all his diplomatic skill to keep the government on track and tensions under control in his forced coalition with the centre-right, given the deep suspicion that exists between the rival blocs.

Berlusconi, caught up in a legal battle over a tax fraud conviction and charges of paying for sex with a minor, is not in the cabinet. But he will have a powerful behind-the-scenes influence and could bring the government down if he chooses.

Buoyant financial markets responded positively last week to signs of an end to the long stalemate that followed February's inconclusive national elections, but notes of caution have been sounded.

Many in Letta's Democratic Party are finding the idea of a coalition with Berlusconi, their foe of two decades, abhorrent and the centre-right, boosted by a solid lead in the opinion polls, has made little effort to strike a conciliatory note.

Even before Letta's government was sworn in, the party was demanding the abolition of the IMU housing tax and the repayment of last year's levy, an election pledge by Berlusconi that will blow an €8 billion hole in this year's budget plans.

Italian business will be hoping for a reduction in the crushing burden of tax and red tape. But badly strained public finances – notably a public debt likely to top 130% of gross domestic product – leave Letta little room for maneuver.

An inconclusive election on 24-25 February left no main Italian political party with a clear parliamentary majority.

The results, notably the surge of the anti-establishment 5-Star Movement led by comic Beppe Grillo, left the centre-left bloc with a majority in the lower house but without the numbers to control the upper chamber, the Senate.

After the re-election of Giorgio Napolitiano as President of Italy and the choice of Enrico Letta to lead the country out of the crisis, the country faces a long political battle, which will require strong diplomatic and strategic skills from the new Prime Minister to manage a three-party coalition.

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