* Electoral reform is key issue on Letta coalition's agenda
* Italy long plagued by political instability
ROME Jan 17 The three small parties backing
Italian Prime Minister Enrico Letta's coalition government
threatened on Friday to bring down his administration unless
they are part of an agreement on electoral reform.
Italy's politicians are making a fresh attempt to reform the
electoral system in the hope of providing steadier and more
durable government in a country long plagued by instability.
In last year's election, no party gained enough votes to
govern alone, plunging Italy into political stalemate before the
creation of a broad-based coalition government which has
constantly bickered and struggled to produce reforms.
Matteo Renzi, the new leader of the centre-left Democratic
Party (PD) - the largest in the government to which Letta also
belongs - has put electoral reform at the top of his agenda.
But the three small parties fear Renzi is trying to cut a
deal on reform with the main opposition centre-right movement of
former prime minister Silvio Berlusconi that would be more
beneficial to the two larger parties.
The New Centre Right (NCD) of Deputy Prime Minister Angelino
Alfano, the Civic Choice party of former premier Mario Monti and
a new centrist formation demanded a meeting of coalition
partners to discuss how to change the electoral system.
"With regards to the PD leader's consultations on electoral
reform... in particular his talks with the opposition, we
urgently call for a meeting of the majority lest the fragile
equilibrium on which the government rests falls apart, leading
to a government crisis," the three parties said in a statement.
SMALL PARTY FEARS
The NCD, which broke away from Berlusconi's centre-right
last year, and the other two parties want a system that would
allow them to win seats in parliament despite their small size.
Renzi and Berlusconi favour a system based on proportional
representation with a large number of small constituencies each
electing four or five representatives and a winner's bonus of 15
percent of seats.
Alfano, whose NCD is a key part of Letta's governing
coalition, fears such a system would reward the larger parties
and prefers a French-style two-round system, which obliges the
large parties to strike pre-election deals with smaller ones.
Despite the recent frenzied talks about electoral reform, an
agreement may not lead to a new law quickly.
Both Letta and Renzi have said that the introduction of a
new electoral law needs to go hand in hand with a reform of
Italy's upper house, the Senate.
Such a major overhaul of Italy's institutional structure
would have to go through lengthy constitutional amendments.