Berlusconi ready to stifle Dini's government

Italy's new government was on the verge of being strangled at birth last night as allies of the outgoing prime minister, Silvio Berlusconi, unexpectedly gave a thumbs down to a cabinet list by his designated successor, Lamberto Dini.

Four days after his nomination by President Oscar Luigi Scalfaro, Mr Dini announced the composition of a slimmed down, non-party political administration, saying he was counting "above all" on the support of Mr Berlusconi's Freedom Alliance to carry out urgent economic and institutional reforms.

Within minutes of his announcement, the list was being denounced as a betrayal of last March's general election, in which Mr Berlusconi rose to power at the head of an unstable right-wing coalition. Two ministers proposed by Mr Dini, Gaetano Rasi and Antonio Marzano, made it known through a reformed neo-Fascist National Alliance party spokesman that they would not accept their posts. Then the Alliance announced it would not support Mr Dini in parliament. "He is lying when he says that his government is non-partisan," the outgoing Labour Minister, Clemente Mastella, said. "The Alliance will vote no."

Mr Berlusconi was less categorical, saying the alliance could still change its mind if Mr Dini's government promised quick elections. "Scalfaro promised me elections by 15 June when he proposed Dini. I don't get the impression this government means to respect that promise."

The lira nosedived. The German mark, worth 1047 lire in mid-afternoon, was at more than 1062 lire by early evening. Political commentators began talking of a "terrifying" emerging atmosphere of political confrontation.

Mr Berlusconi's supporters had given a cautious welcome to Mr Dini when he was named last Friday, apparently giving up their demand for immediate elections if Mr Berlusconi could not be reinstated. But yesterday they made clear they were unhappy that none of their nominees, in particu lar the outgoing Cabinet Secretary, Gianni Letta, was on Mr Dini's list.

Cesare Previti, Mr Berlusconi's right-hand man, accused the President of creating a "serious political and institutional crisis" by refusing his movement's demand for elections before June. Gianfranco Fini, the National Alliance leader, said President Scalfaro's position would come into the firing line if Mr Dini refused to stand down.

Mr Dini's proposed government included 21 full ministers and three under-secretaries of state, none sitting members of parliament. The financial portfolios went to economic experts, with Mr Dini keeping responsibility for the Treasury, the ministry he held under Mr Berlusconi.

Justice and home affairs go to senior magistrates, defence to a retired general chief of staff and foreign affairs to Susanna Agnelli, a former junior foreign minister and sister of the Fiat boss Gianni Agnelli. "I have given the head of state the names of persons of great experience and indisputable judiciousness," Mr Dini said in a prepared statement, explaining he had specifically resisted pressure to include some political nominees.

If Mr Berlusconi's allies persist in their opposition, Mr Dini has two choices. He can forge ahead regardless, hoping the centre and left-wing parties in parliament will make up the numbers to pull him through the confidence vote required for him to start work. Last night the Christian Democrat centre, the federalist Northern League and the left-wing PDS all said they would support him.

Alternatively, Mr Dini can resign, acknowledging he did not have the support that he was looking for. President Scalfaro would then have to hand on the prime ministerial baton to someone else, or call elections, an option he has firmly resisted.

Neither choice looks good. The first would make Mr Dini, a dyed-in-the-wool conservative, a prisoner of his political adversaries in parliament and expose him to justifiable accusations of betrayal of the Freedom Alliance in general and his political mentor, Mr Berlusconi, in particular.

The second would plunge Italy into yet more political and economic chaos. With no obvious alternative to Mr Dini in sight, the country could face weeks if not months of uncertainty.

Mr Berlusconi's allies, therefore, have a strong interest in negotiating.