Italy opts for continuity

Date: 25/04/1996

By Ivo Ilic Gabara

“ITALIANS have voted for calm,” said Romano Prodi, leader of the 'Olive Tree' centre-left coalition which won last Sunday's general election in Italy.

He may well have added calm for Italy, the financial markets and for the Italian presidency of the EU.

Of the two main blocks that contested the elections - media magnate Silvio Berlusconi's centre-right and the centre-left - it was the latter which offered more guarantees of continuity and steady governance. On Europe in particular, the centre-left had a much less contentious electoral programme.

While, for example, the centre-right openly questioned the Maastricht convergence criteria and the 1999 deadline for EMU, centre-left caretaker Prime Minister Lamberto Dini recalled Italy's “fundamental pro-European and pro-integration approach” in a speech in Strasbourg only four days before the elections.

He insisted that this approach would be continued after the elections, irrespective of who won.

Now Dini and his other partners in the 'Olive Tree' coalition have an opportunity to honour that commitment.

However, two important factors which could disturb the promised calm still hang over the last two months of the Italian presidency.

The first is that to form a government, the centre-left will need the support of the hard-core Marxist party, Communist Refoundation. Its leader, Fausto Bertinotti, has repeatedly insisted that monetary union will not be ushered in at an unacceptable social cost and his price for supporting the new government is likely to mitigate the centre-left's pro-integration ardour.

It should also be stressed that the 'Olive Tree' is an electoral coalition encompassing a wide range of parties, from the former Communists of the Democratic Party of the Left (PDS) to splinter groups of the former Christian Democratic Party.

Once in power, the cohesion of the coalition will be put to a severe test.

The second possible cause of further disruption lies in the time it takes to form a government in Italy. During the last general election, Silvio Berlusconi won the day on 27-28 March, but it was not until 11 May that he was sworn into office.

To nominate a prime minister-designate, the president of the republic must first consult the leaders of the parliamentary groups and the speakers of the two houses of the Italian parliament. None of these appointments will be made before the new parliament sits for the first time on 9 May.

The next step will be for the prime minister-designate to hold further talks with the political parties, trade unions and business leaders on the composition of the government and its programme.

If the new government manages to muster sufficient support during these talks, it will be sworn in by the president, but it must then win votes of confidence in both houses of the parliament.

The whole process may well take up the best part of the remaining two months of the Italian presidency. However, the new government should be in place in good time to wrap up Italy's six months at the EU helm at the European summit in Florence on 21 June.

In the meantime, it will be business as usual - with the caretaker government of Lamberto Dini still in charge.

In the wake of the centre-left's historic victory, speculation is already mounting that the election result could lead to an early return of the lira to the European Exchange Rate Mechanism - a move which would be welcomed by other EU governments whose industries have been hit hard by successive devaluations of the lira since 1992, but only if the currency's stability can first be assured.

Prodi said this week that taking the lira back into the ERM would be a priority for the new government. “That should take a few weeks at most. The macro-economic conditions are right,” he insisted.