Presidency set for crisis

Date: 26/10/1995

By Jacki Davis

THE European Union faces the prospect of another presidency virtually paralysed by domestic political problems as Italian Prime Minister Lamberto Dini prepares for a vote of no-confidence in his government.

If Dini loses the vote, as seems likely, he could be forced into calling a snap general election - Italy's third in four years - plunging the country back into the political limbo in which it has languished repeatedly in the post-war era.

Even if he confounds his critics by winning, few expect Dini's government of technocrats to last much longer, with commentators suggesting a general election cannot be delayed beyond March next year.

Just a few weeks ago, there was talk of Dini's government holding on to power for long enough to avoid a general election until after the Italian presidency ends on 30 June next year.

That now seems a forlorn hope and means the EU faces a crucial six-month period, during which the Intergovernmental Conference to review the Maastricht Treaty is due to be launched, with the presidency's eye once again focused firmly on its political problems at home.

Defeat for Dini in the no-confidence vote, expected today (26 October) could also jeopardise Italy's chances of qualifying for membership of the single European currency zone.

Hopes that the lira might be allowed back into the Exchange Rate Mechanism by the end of the year have now faded amid predictions that even if Dini survives the no-confidence vote, the credibility of his government has been fatally undermined and the question of the lira's re-entry into the currency grid will remain on the back-burner for several months at least.

News this week that the hard-left Refoundation Communist party had decided to join forces with their right-wing enemies, led by media magnate and former Prime Minister Silvio Berlusconi, to try to bring down the government immediately prompted a sharp fall in the lira, which has already lost more than a third of its value against the deutschemark over the last three years.

The market's reaction was prompted by fears that the crisis facing Dini's government could have long-term repercussions for the country's efforts to get its economy in shape in time to meet the Maastricht Treaty's 1999 deadline for economic and monetary union.

Dini's 1996 budget had been designed to demonstrate to the financial markets that Italy was ready to make the sacrifices needed to reduce deficits and government debt in time to meet the Maastricht “convergence criteria” by the end of the decade.

The fate of the budget, expected to go through the Italian parliament without any major hiccup before the crisis which has erupted over the last two weeks, now also hangs in the balance.

The instability of successive Italian governments is well known - Dini is the 54th prime minister Italy has had since the end of World War II in a country where long drawn-out elections are commonplace.

But many believe that the situation is particularly serious this time, because of the lack of potential new political leaders waiting in the wings.

Berlusconi, whose challenge to the Dini government led to the tabling of the no-confidence motion last week, is due to face trial on corruption charges on 17 January next year.

Overall, the prospects for Italy's six-month term as head of the EU ship now look decidedly bleak.

So chaotic is the Italian political scene that its government has not yet even decided on the venue for the two key summits of its presidency: the one which will formally get the IGC under way and the other concluding its six months at the helm.

Florence has been named as a possible contender to host the IGC summit, with Turin and Bologna in the running as possible venues for the June summit, but Dini has delayed a final decision for fear, it seems, of prompting a storm of complaints from other Italian regions vying for a role.