Prodi’s team signifies continuity for Union

Date: 23/05/1996

By Ivo Ilic Gabara

The make-up of the new Italian government has sent a clear message of continuity in Europe to Rome's partners in the Union.

The most powerful evidence of this was Premier Romano Prodi's decision to merge the treasury and budget portfolios, placing them in the expert hands of former central banker and Prime Minister Carlo Azeglio Ciampi. A pro-European, Ciampi now holds the key to redressing Italy's public finances and ensuring its convergence with the EU's other major economies.

Ciampi has been given the dual task of taking the lira back into the Exchange Rate Mechanism and pursuing the Maastricht convergence criteria. No one is better placed to do so. The 'superminister' considers the goal of “entry into Europe” as vital for Italy and recently confided to German Chancellor Helmut Kohl that “without an institutionally-structured Union ...dangerous nationalistic instincts may resurface”.

He is determined to pursue this goal “even at the cost of blood and tears”. He also regards the re-entry of the lira into the ERM as a personal matter - it was Ciampi who, in 1992, was forced to devalue the lira and take it out of the system and is now charged with bringing it back into the fold.

Accordingly, the government has made agreement on a corrective mini-budget for 1996 its first priority. The Union's monetary committee has estimated that Prodi will need an additional 6-7 billion ecu to put the current budget back on track. Once this hurdle has been overcome, the government will prepare its 1997 budget next month with a steady eye on the Maastricht targets.

This is where the new team is likely to receive its baptism of fire. To pass a stringent budget, Prodi and Ciampi will need the support of Fausto Bertinotti's Communist Refoundation and although Bertinotti supported the formation of the new government, he strongly opposes pursuing the convergence criteria “at an unacceptable social cost”.

The second sign of European continuity is the appointment of former Prime Minister Lamberto Dini as Italy's foreign minister. Dini amply demonstrated his Euro-credentials during his premiership and the first four months of Italy's EU presidency.

He may, however, strike a discordant note if he devotes more time to building a new political power base around his Italian Renewal Party than to his duties as foreign minister. To ward off this danger, Prodi is likely to appoint Piero Fassino, from the PDS ranks, as Dini's deputy with special responsibility for European affairs.

Tiziano Treu, the only minister from Dini's government to keep his portfolio, remains employment minister. Both he and Prodi have declared the fight against unemployment to be a top priority.