Maastricht: Unions lock horns with government: Italy's growing unrest

ROME - The battle of wills between Giuliano Amato's fragile government and the irate crowds protesting almost daily in the streets is nearing a showdown.

The government yesterday put the final touches to its 1993 budget. Italy's credibility, the future of the lira (still outside the European exchange rate mechanism) and hopes for economic recovery depend upon its success, as well as on the even more painful and unpopular austerity measures.

But the prospect of a general strike against the measures is looming. Political groups and trade unions are proposing a welter of alternative measures. The crucial question is whether the government can stare down the protesters in the streets and the politicians who will try to water down its plans in parliament.

The hundreds of thousands of pensioners, factory workers and other fed-up Italians who have marched through the streets all around the country testify to widespread disaffection. But things are more complex than they seem.

Many of the more aggressive demonstrators have been extreme left-wingers who have remained politically inactive since the death of communism and have now exchanged ideology for more pragmatic concerns about pensions, health care and unfair taxes. As they return to the scene, fears are lurking that some might, as in the past, take to terrorism.

They have been joined by factory 'grassroots committees' and many other workers in protesting as much against the established trade unions as against the government. For the national trade union leaders, aware of what is at stake, have agreed to renounce wage-indexation.

Alarmed, the biggest and most left-wing trade union federation, the CGIL, has now proposed a nationwide general strike, clearly to try to reassert union control of the situation. The other two federations, the UIL and CISL, are thinking about it, and seem likely to agree.

But the disaffection in the streets goes even deeper. Many demonstrators and strikers would be more willing to pay up, they say, if they could believe it would do some good. 'These politicians are all corrupt,' growled a taxi- driver in Rome. 'They have ruined the country, why should we give them any more to put in their pockets?'

With a majority of only 16 in parliament, Mr Amato looks ill-equipped to withstand such opposition. He has already back-tracked once over some of his earlier measures. But the Prime Minister has served notice that he is going to get his way or resign - and there is nothing the discredited political parties fear more than a government crisis and the prospect of fresh elections.

And if any needed reminding of what could await them, local elections in Mantua on Sunday provided a sobering lesson. The maverick, secessionist Northern League won 34 per cent of the vote, roughly twice as much as the four government parties put together. Mantua is not representative of the country, but it was a shock for the established parties.

As the government prepares to push its measures through parliament, fresh calculations have revealed a shortfall of 10 trillion lire (about pounds 5bn) which will probably have to be made up for by further cuts or taxation. And rumours that the government was about to freeze part of everyone's bank account in preparation for a compulsory loan to the state had crowds queuing this week to empty their accounts.

Mr Amato was forced to give a public assurance on Tuesday that the government had no intention of touching their savings. 'Whoever stuffs their money under their mattress is doing something foolish,' he said. As if to prove his point, a pensioner who withdrew his savings and did precisely that woke up the next morning to find they had been chewed up by mice.