Rome

Letta talks to parties in govt-formation bid

Tries to unite old foes PD and PdL

Letta talks to parties in govt-formation bid

(updates previous). (By Denis Greenan). Rome, April 25 - Centre-left Democratic Party (PD) deputy head Enrico Letta talked to parties Thursday to break Italy's political logjam and form a government two months after inconclusive elections. Newly re-elected President Giorgio Napolitano tapped Letta Wednesday after lashing parties for not agreeing on a broad-backed reform government and saying he would quit if they didn't. Letta, 46, would be Italy's third-youngest premier if he pulls off the tricky job of getting old enemies PD and scandal-plagued conservative ex-premier Silvio Berlusconi's People of Freedom (PdL) party to bury their differences. "The government is more important than the person who leads it," Berlusconi said. Italian media said Thursday Letta's likelihood of success was "too close to call". Letta's aim is to form a slimmed-down 18-strong government before the financial markets open Monday, media reported. Hurdles include the PdL's electoral pledge to pay back a property tax, which the PD thinks is not possible given EU budget constraints, and deep divisions over the justice system. Many in the left wing of the PD, which is riven by factional squabbling after outgoing leader Pier Luigi Bersani failed to get two candidates elected, are dead against an alliance with arch enemy Berlusconi, involved in trials for paying an underage prostitute for sex and tax fraud at his Mediaset media empire. Bersani resigned amid a PD meltdown and parties begged Napolitano, 87, to serve an unprecedented second term. In his re-inaugural speech he lashed "deaf" and "sterile" parties who have been discredited by corruption scandals for failing to pass reforms including a new electoral law that could produce a clear winner, and measures to create jobs and lift the economy out of its worst recession in 20 years. On February 25 the PD's alliance got a majority in the House but not the equally powerful Senate, leading to a hung parliament where the anti-establishment 5-Star Movement (M5S) led by comedian Beppe Grillo holds the balance of power. Berlusconi's alliance came in a very close second and the three-time premier has since been calling for a grand coalition with the PD. Bersani rejected this and tried to reach out to M5S, which is refusing to work with either party. On Thursday Napolitano appealed to the parties to show "courage and determination" to seal a deal on a left-right coalition which would also be backed by outgoing Premier Mario Monti's Civic Choice. "We are in a time of ... crisis," Napolitano said at the national Museum of Liberation in central Rome, noting the memorial was a powerful reminder of the value of courage and determination shown by the Resistance in the Second World War. "We have much to learn about how to address these crucial moments: with courage, firmness and sense of unity that were decisive for winning the battle of the Resistance". The PD is reluctantly considering the grand coalition amid plummeting poll numbers and the possibility PD left-wingers will peel off to join its election-campaign former ally, the Left, Ecology and Freedom party, in opposition. PdL leader Angelino Alfano said Wednesday the PD must fully back a Letta government or be responsible for a weak administration tasked with taking Italy back to the polls in June, possibly with a new electoral law. Berlusconi said the new government must stoke growth in the eurozone's third-biggest economy. He reiterated an 8-point plan which has a couple of points in common with an 8-point agenda of change Bersani futilely proposed to M5S. Letta has also said he will push for the EU to ease austerity policies - a call that was backed Thursday by Brussels and the International Monetary Fund. David Lipton, first deputy managing director with the IMF, said European politicians must back away from austerity measures and find lasting policies that will boost economic growth. "There is ... a risk that Europe could fall into stagnation, which would have very serious implications for households, companies, banks and other institutions," he said.

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