Italy PM vows reforms as tensions with Renzi grow

ROME Tue Feb 11, 2014 10:46am EST

Italy's Prime Minister Enrico Letta holds a news conference at the EU Commission headquarters in Brussels January 29, 2014. REUTERS/Laurent Dubrule

Italy's Prime Minister Enrico Letta holds a news conference at the EU Commission headquarters in Brussels January 29, 2014.

Credit: Reuters/Laurent Dubrule

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ROME (Reuters) - Italian Prime Minister Enrico Letta on Tuesday promised new measures to lift the economy and strengthen his fragile coalition after weeks of tension with his own party leader Matteo Renzi over the slow pace of reforms.

Renzi, the new leader of the centereft Democratic Party (PD), has said the government would be better off calling new elections if it is unable to push reforms more effectively.

Italy, the euro zone's third largest economy, badly needs reforms to emerge from its longest postwar recession and curb unemployment now at its highest level since at least the 1970s.

Letta gave no details of the package of reforms, which he said would be announced on Wednesday, but added he was confident it would win the backing of both the PD and the smaller centeright and centrist parties that make up his governing coalition.

"I will propose a coalition agreement that is heavily based on the issue of economic revival," he told an event in Milan.

His open criticism of Letta has fuelled talk that Renzi, 39, buoyed by his strong victory in the PD party leadership primary in December, may covet the post of prime minister for himself.

Renzi is under pressure to set his own mark on the coalition both by supporters and foes who say his status outside the government has spared him a share of the blame for its problems.

Renzi, who is mayor of Florence, has made no secret of his ambition to become premier in the future but has denied aiming to take over now from Letta, saying any such change without an election would smack of the short-lived governments of the postwar period which succeeded each other every few months.

More than two thirds of Italians oppose changing the prime minister without fresh elections, according to an opinion poll published by IPR institute.

UNCERTAINTY

Renzi said a PD leadership meeting to discuss the future of the coalition would be brought forward to Thursday from February 20.

"We will see whether this government's batteries can be recharged or whether they have to be replaced," he told PD deputies, according to one parliamentarian at the meeting.

In a further sign of the rising political tensions, parliament delayed a debate scheduled for Tuesday on proposals to reform an electoral law that is blamed for last February's deadlocked election until next week.

The uncertainty over Renzi's intentions has left room for rampant speculation over the government's future among deputies long used to the byzantine maneuverings of Italian politics.

"It's only a matter of seeing when Letta resigns," said Stefano Fassina, a former PD deputy economy minister who left the government over disagreement with Renzi's open disdain for the traditional left but now wants him to become prime minister.

"As far as I'm concerned, the situation can only be resolved if Renzi takes over the government," said Fassina.

Some Renzi allies said the pressure on him to become premier appeared aimed at damaging his chances in a future election.

"I don't think that everyone pushing for a handover from Letta to Renzi are motivated by good intentions. Some of them are just looking for a way to burn Matteo," Debora Serracchiani, governor of the Friuli region and a close Renzi ally told the La Repubblica daily.

Although the political ructions are being closely watched outside Italy, the pressure on Rome from financial markets has eased considerably since the deadlocked election a year ago which brought Letta's unwieldy coalition to power.

In a sign of the wider political tensions in Rome, parliament on Tuesday rejected a bid by the anti-establishment 5-Star Movement to impeach President Giorgio Napolitano, but opposition lawmakers kept up their attacks on the 88-year-old head of state.

(Writing by James Mackenzie; Editing by Gareth Jones)

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