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Last Updated: Thursday, 18 May 2006, 16:58 GMT 17:58 UK
Prodi's political chess game
By Christian Fraser
BBC correspondent in Rome

Romano Prodi
Mr Prodi has spoken of a "moral crisis" in Italy
In the last few weeks Romano Prodi has been playing a game of political chess, forming a cabinet that he hopes will keep all sides happy.

He leads a broad coalition made up of two large mainstream forces and a mixed group of smaller parties, ranging from Communists to ex-Christian Democrats.

With a majority of just two seats in the upper house (Senate), he knows he can ill afford any early disagreements.

Not until the very early hours of Wednesday morning did he finally emerge with what he considered a winning formula. "They are satisfied, maybe not all of them are happy," Mr Prodi said shortly before announcing his cabinet.

"But it's a team that will last the entire legislature. I hope it will get along well."

Concessions

There are plenty of people with doubts.

KEY CABINET POSTS
Prime Minister: Romano Prodi
Foreign: Massimo D'Alema
Culture: Francesco Rutelli
Economy: Tommaso Padoa-Schioppa
Interior: Giuliano Amato
Justice: Clemente Mastella
Defence: Arturo Parisi
Labour: Cesare Damiano
Education: Giuseppe Fioroni
Agriculture: Paolo De Castro
Health: Livia Turco
Environment: Alfonso Pecoraro Scanio
Transport: Alessandro Bianchi

One look at this new cabinet shows that Mr Prodi has already had to make some early concessions.

He has named two vice premiers. One is the former Prime Minister Massimo D'Alema, a long-time senior figure in the biggest party in the coalition, the Democrats of the Left. The other is the former mayor of Rome, Francesco Rutelli, leader of the other main coalition party, La Margherita.

Another surprise is Clemente Mastella, the new justice minister. He is the leader of the small, formerly Christian Democrat UDEUR party. They hold three crucial Senate seats. He had threatened to pull his party out of the coalition if he was not handed a key ministry.

An interview published in the Italian newspaper La Stampa laid bare the differences between Mr Mastella's party and the others.

"So the big boys are in the room talking things over with Romano Prodi," said Mr Mastella. "And we small fry are expected to stay outside the door and then see what crumbs they have left us."

Referring to an attempt by the two big parties to merge into one large "Democratic Party" he said: "They are supposed to be setting up a party together and instead they are bickering over everything, obstructing the formation of the government.... it is an unprecedented display of grabbing."

Small parties' clout

With this slender two-seat majority in the Senate, and such a diverse range of views in the coalition, these might not be the only concessions Mr Prodi is forced to make.

Silvio Berlusconi
Mr Berlusconi was reluctant to admit defeat in the knife-edge election
The electoral process has weakened the big parties that underpin the coalition government, and strengthened the smaller ones that by tradition are only too ready to bring governments down.

It is disturbingly reminiscent of the situation here before 1994, when parties with little popular support exerted huge influence by constant threats of defection.

The Communist Refoundation for example - who performed well in this election - are now in a position to exert considerable pressure. Within their party there are two controversial figures: Francesco Caruso, a leader of the Italian anti-globalisation movement, and Vladimir Luxuria, a transgender gay rights activist. His views on same-sex marriage are not those shared by the more moderate elements of Mr Prodi's coalition. The debate on civil union should be an interesting one.

And some fear the trade unions, the real opponents of job flexibility and privatisation, will pressure the extreme left to block the necessary economic reforms.

Economic woes

Any return to revolving governments would be a disaster for Italy. Reform is now urgent.

Economic growth is the lowest in Europe. Unemployment is high. Debt is already well above the limit allowed in the single currency framework.

Education needs investment, trade unions need reform and local government is almost insolvent.

But there are some positives in this new government.

Mr Prodi, a former economics professor, has a good reputation for fiscal reform. He dragged Italy into the euro when many thought it was impossible. He is also more experienced than he was in his first term as prime minister.

Political calculations

His choice of speakers was interesting. He pushed Fausto Bertinotti - Communist Refoundation - as his choice of Speaker for the lower house. And Franco Marini - a former trade union leader - as his Speaker for the Senate.

Some say he was pressured to promote Mr Bertinotti. Maybe - but when the time comes to debate the more difficult decisions on the economy, the Communist Refoundation now have a vested interest in the government's survival.

Mr Prodi has also named his own man as the economy minister: Tommaso Padoa Schioppa, a man without any party affiliation. He is a well-respected economist and former member of the executive board of the European Central Bank. His appointment has already reassured the markets.

Former Prime Minister Silvio Berlusconi says he can bring down the new government in a matter of months. The centre-left will be aware of that threat - and some say it may galvanise the coalition. They know that any major disagreement would hand power back to Mr Berlusconi immediately.

The first major test will be the 2007 budget, to be presented in September. It invariably causes disagreements as parties try to avoid cuts that would hurt their power base.




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