Italy's new prime minister Romano Prodi won the final seal of approval from
parliament on Tuesday, allowing his centre-left government to get on with
running a country whose public finances are spiraling out of control.
Italian Prime Minister
Romano Prodi listens to a speech at the parliament in Rome, May 22, 2006.
Prodi's victory in the lower house, where he enjoys a much bigger majority
than in the Senate (upper house), had been expected. The chamber passed the
confidence vote, the last step in the transition from Silvio Berlusconi's record
five-year stint in power, with 344 "yes" and 268 "no" votes.
"It could not have been better than this," Prodi, who won a parliamentary
election last month by a razor-thin margin, told reporters after the vote.
But the good news ended there for Prodi as the Organization for Economic
Co-operation and Development (OECD) warned that his government may be too weak
to achieve badly needed but unpopular economic reforms.
Prodi told parliament ahead of the vote his priority was to drag Italy out of
stagnation and stem a growing budget deficit which he said was in a critical
"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 said, without
specifying any policies that would likely have to include spending curbs and tax
Prodi based his election campaign on a promise of "serious" government
compared with Silvio Berlusconi's tax-cutting stance, but denied accusations by
his centre-right rival that once in power he would raise taxes across the board.
In its twice-yearly report on economic outlook, the
Paris-based OECD said Prodi's pledge to push through economic reforms was
undermined by his slim parliamentary majority.
"Political risks seem especially high," the OECD said of Prodi's ability to
enact structural reforms.
"It may be difficult to undertake reforms given the thin parliamentary
margins and fragmented nature of the ruling coalition," it said.
Prodi's government is drawn from eight parties stretching from Roman Catholic
moderates to committed communists.
It has a majority of nearly 70 seats in the lower house, despite its slim
election victory, thanks to an electoral system which handed a bundle of extra
seats to the winning coalition.
But in the upper house it enjoys only a two-seat majority, which is likely to
make life hard for Prodi as he will have to rely on the loyalty of his unwieldy
allies to pass any laws.
Underscoring the narrow room for maneuver, the Senate approved the new
government last Friday by 165 votes to 155. The margin was boosted by Italy's
seven unelected senators for life and one independent senator.
One of Prodi's 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 corrective measures.
Berlusconi, narrowly defeated in 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 claim will be put to the test on Sunday and Monday when many Italians go
to the polls again in local elections to elect the mayors of large cities,
including Rome and Milan.