REPEAT: Italy Readies for Vote; Slow Process To Form Next Govt

Repeats Story Initially Transmitted at 0757 GMT Jan 2

--Current Government Will Continue To Function

By Silvia Machetti

     ROME (MNI) - Italy faces a period of instability ahead of the March 4

elections, but the next few months will not see a void in government, senior

sources told Market News.

     "This current government of Premier Paolo Gentiloni will still be

functioning until the next one is formed. It retains all its powers to approve

urgent decrees and carry on with all regular governing," a senior government

official told Market News.

     Last Friday, Italy's head of  state, Preisdent Sergio Mattarella, announced

the dissolution of the current parliament, officially triggering a 60-day

election campaign. 

     The date for the general election was set for March 4, with the new

parliament expected to hold its first session on March 23.

     The source said it was crucial to send out a positive message of

"continuity" despite the limbo of the election campaign, in order to reassure

investors and markets that Italy will still have a fully functioning government.

     --NO EASY ROUTE

     However, the journey from the current to the next government will not be

easy, or "automatic", warned Sergio Fabbrini, head of the School of Government

at Rome-based LUISS University.

     "There are high risks that the ballot boxes on March 4 might not deliver a

solid majority able to ensure governability. If leading parties fail to form

alliances or reach agreements, we'll need a second vote straight away," said

Fabbrini.

     Analysts worry that before a new cabinet takes office, with a supporting

functioning parliament able to pass laws and reforms, the country could face 

months of paralysis.

     According to Italy's constitution, a government can only be formed once

parliament reconvenes and only after the Senate and Lower House appoint leaders.

Mattarella will then hold a round of talks to judge whether a ruling majority

exists. 

     Should there be no support for a new government, a second vote would be

required.

     Italy's new proportional voting system makes it impossible for any party to

win the required amount of seats to govern without support, thus the need to

form alliances.

     Analysts see many potential coalition scenarios. Former premier Silvio

Berlusconi, the centre-right leading candidate, recently said that if the March

vote fails to produce a settled outcome, a second ballot should take place, but

only after a further period of campaigning.

     --GENTILONI REDUX

     Berlusconi even suggested extending premier Gentiloni's mandate as needed

until a strong government can be formed and all institutions return to full work

mode. This could be Mattarella's most likely option if the first vote falls

short.

     Talk is gathering pace suggesting PM Gentiloni will get the chance of a

second term at the helm of a 'temporary' cabinet between a first and second

vote, possibly beyond that. 

     The premier appears to be the best option at present to stave off a

potential political crisis given his high poll rating, with approval ratings

solid even among opposition party supporters.

     Gentiloni has so far declined to comment on his possible re-appointment

were the Democrats to win on March 4.

     Former premier Matteo Renzi has acknowledged that his support has fallen in

recent months, saying he would be willing to step back for the sake of the

country were Gentiloni to be the only figure able to unite different parties in

a governing majority.

     The government source, despite downplaying such a scenario, did not

completely rule it out.

     "Gentiloni is very close and loyal to Renzi and has always followed Renzi's

strategy, implementing all the crucial reforms, and has done whatever is best

for this country when the need has arisen. He will continue to do so no matter

what will happen in March," said the official.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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