May 23, 2006

Italy’s Prodi set for final parliamentary approval

By Robin Pomeroy

ROME (Reuters) - Italy's Prime Minister Romano Prodi was
set to get the final stamp of approval to his new government on
Tuesday, allowing him to get on with running a country whose
public finances are out of control.

Prodi told parliament ahead of the vote his priority was to
drag Italy out of stagnation and stem a spiraling budget
deficit which he said was in a "critical" state.

"We have gone back under the spotlight of the international
markets. In the next few weeks we will take decisions on how to
move," Prodi told parliament, without specifying any policies
that would likely have to include spending curbs and tax hikes.

Prodi narrowly beat Silvio Berlusconi in Italy's closest
ever election in April, his promise of "serious" government
narrowly winning against the media tycoon's tax-cutting stance.

In his address to parliament, Prodi stressed his desire to
work closer with European Union partners on foreign policy and
to resuscitate the EU constitutional treaty which was rejected
by referendums in France and the Netherlands.

"Counting in Europe is our way of counting in the world,"
he said, underlining a change of emphasis from Berlusconi who
built close ties with President Bush and sent troops into Iraq
after the invasion Prodi called "a grave mistake."


Prodi is likely to easily win a confidence vote, expected
at around 8 p.m. (1800 GMT), the last step marking the
transition from Berlusconi's record five-year stint in power.

The center left has an ample majority in the lower house,
despite its slim election victory, thanks to an electoral
system which handed a bundle of extra seats to the winning

Last Friday, the upper house, in which it has only a
two-seat majority, approved his government by 165 votes to 155.
The margin was boosted by Italy's seven unelected senators for
life and one independent senator.

The tiny upper house majority is likely to make life
difficult for Prodi as he will have to rely on the loyalty of a
rickety, eight-party coalition ranging from centrist Roman
Catholics to communists to pass his reforms.

One of his first major decisions will be whether to adopt a
"mini budget" to rein in the 2006 budget deficit which
Berlusconi's government forecast at 3.8 percent of GDP, but
which deputy economy minister Vincenzo Visco said was more
likely to be 4.5 percent without new measures.

Berlusconi, who defied opinion polls predicting a crushing
defeat but still narrowly lost the election, repeated his hope
that a parliamentary commission would find "irregularities" in
the April 9-10 election result and overturn Prodi's win.

Berlusconi told a TV chat show late on Monday that if the
election were re-run now, an opinion poll he commissioned
showed his coalition would win 52.8 percent of the vote against
46.7 percent for Prodi's bloc.

That assertion will be put to the test on Sunday and Monday
when many Italians take to the polls again in local elections
to elect the mayors of main cities, including Rome and Milan.

(Additional reporting by Gavin Jones)