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Political Instability, Corruption Thwart Italy's EC Commitments

ITALIANS are the most vocal supporters of European unity, but whether they can comply with the requirements for economic and monetary union laid out at the European Community summit in Maastricht, Netherlands, seems highly improbable, observers here say.

Despite Prime Minister Giuliano Amato's first steps toward the reform of Italy's troubled economy, the country seems unable to reduce its public debt and rate of inflation fast enough to satisfy the rest of the EC and meet EC deadlines set for 1996.

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"Italy can't succeed in meeting the Maastricht demands within the next five years," says Antonio Lettieri, the head of the international department of CGIL, the country's largest trade union. "It's impossible, in my opinion."

The Amato government already has raised taxes and abolished the wage indexation system that had been in effect since the end of World War II. Last Friday, as part of a package of deficit reduction measures, the government said it would proceed with the privatization of four huge state companies, including IRI, Italy's largest company.

Even with this progress toward the Maastricht goals, the Amato government is still precarious. It groups the same four parties - the Christian Democrats, the Socialists, the Social Democrats, and the Liberals - that were in the last government coalition, led by veteran politician Giulio Andreotti. And it has only a 16-seat majority in the Chamber of Deputies.

"The Amato government is very weak. It's made up of the old coalition that's responsible for these economic and financial problems," says Mr. Lettieri. "To face these problems, a stronger government is needed, one that includes the Democratic Party of the Left [the ex-Communist Party] and the Republicans."

While the Italians argue the merits of their month-old government, the rest of Europe continues to debate the Maastricht Treaty. So the question of whether Italy will meet the Maastricht deadline or not could be a moot point, a Western official here suggests.

"The people of Denmark are so fiscally righteous you can hardly stand it, and these same people have questions about where Europe is going," he says.

"It seems to me there's a very good chance you're not going to see Maastricht forging ahead.... There are too many question marks. The British haven't decided what they're going to do. And who knows what's going to happen in the French referendum?"

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Furthermore, Germany's role in EC economic matters remains a question for some Europeans.

"The construction of Europe is being done under the leadership of the [German] Bundesbank, which has a very restrictive policy," says Lettieri.

No matter what happens to the Maastricht agreement, however, the lesson for Rome is clear: Italy must put its financial house in order.

For this reason, many Italians view Maastricht as a positive development, says the Western official. "They see the Community imposing on them certain disciplines that they feel are needed but which they see their political system as ill-designed to effect."

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