MNI EXCLUSIVE: Local Votes May Tip Italy Govt Balance of Power

By Silvia Marchetti

     ROME(MNI) - Upcoming regional elections have the potential to alter the

balance of power between the partners of Italy's coalition government, which is

likely to stick together even if voters give it a beating, party sources told

MNI.

     On Sunday, the traditional left-wing bastion of Emilia Romagna and the

southern region of Calabria will renew local assemblies in the first of a series

of eight regional votes that will run till June. Polls suggest Matteo Salvini's

far-right League could win in most regions, including some Democrat strongholds,

prompting some analysts to suggest that the centre-left party might be tempted

to put distance between itself and its partners in the populist 5-Star Movement,

which has been plagued by dissent and defections.

     But sources at both the Democrats and 5-Star said they would hold together

even in the face of League surge. A key factor is that polls show the League,

which ended its own coalition with 5-Star in August, would win any national

election prompted by a government collapse, said a Democrat source, noting that

"a local vote in Italy has never determined nor triggered a national vote."

     Despite their alliance at a national level, 5-Star and the Democrats are

not running together in any of the regions, after such teamwork was ruled out by

the populist movement's members in an online vote.

     The Democrat official noted how his party had joined forces with 5-Star

this past summer to avert the risk of an early vote and a possible rise to power

by League leader Matteo Salvini.

     --BALANCE OF POWER

     "The outlook hasn't changed, yes there are tensions, but this coalition

still has three more years of legislature ahead and we plan to move along," the

source said. "We can't afford an early vote, which always causes a high degree

of political uncertainty and can have repercussions on market perceptions of our

debt and on spread levels at a time when both seem to be under control", said

the Democrat source.

     The government is trying to push through investment plans and tax cuts for

low-earners to boost growth and internal consumption.

     A 5-Star source, critical of the alliance with the Democrats at the

national level, said the regional election results could prompt a rebalancing of

power within the coalition, in which the Democrats are the junior partners.

     "We need to look at the voting percentages. The final outcome will

determine which party, once we get over this electoral campaign, will actually

have more power for the remaining three years of the legislature. If the

Democrats do well, they will want to go forward on their terms, but if we get

more votes than them, it's going to the opposite," said the 5-Star source.

     Five-Star members would like it to push for more tax cuts, and for boosting

payments to the unemployed, while the Democrats would tend to favour more public

investment, sources said.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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