Defeat on graft spells more trouble for Italy's coalition

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THE bruising defeat of the Italian government's attempts to curb the power of anti-corruption magistrates has bitterly divided the ruling coalition, heralding more trouble as the cabinet struggles to agree its economic policy for the year ahead.

While the top 'clean hands' judges were back at work yesterday, basking in the success of their quit threats in forcing the government to back down, MPs from the three ruling parties traded recriminations. 'If, every time a minister trembles, or gets upset, the government has to change position, we might as well let the judges rule,' said Vittorio Sgarbi, an MP close to the Prime Minister, Silvio Berlusconi.

Mr Sgarbi, who belongs to the Prime Minister's Forza Italia party, was referring to the actions of the Interior Minister, Roberto Maroni, of the Northern League, who had threatened to resign over the decree issued by the government suspending magistrates' rights to place graft suspects in preventive custody. That Mr Maroni signed the decree and then claimed that he had been tricked into doing so has incensed his Forza Italia allies.

'The 'clean hands' magistrates are the real dictators, capable of imposing the laws that they want,' continued Mr Sgarbi. His words, while reflecting the bitterness of a humiliated government, do raise a valid point. How proper is it that the judiciary, however worthy, be allowed to influence government policy? The leader of the 'clean hands' team, Francesco Saverio Borrelli, said yesterday that 'we do feel the weight of responsibility' of their actions, but he maintained that his judges were merely 'passing a technical judgement on the unacceptable aspects of the decree'.

Mr Berlusconi is said to be furious with his other partners, the neo-Fascist-led National Alliance (AN). They have traditionally been more reliable than the populist and unpredictable Northern League. When public outcry at the decree grew, AN's leader, Gianfranco Fini, called on Mr Berlusconi to abandon it.

The Prime Minister could not get over the fact that Mr Fini, whom he presented to President Clinton at the G7 summit in Naples as 'my most loyal ally', had let him down, said Alessandro Meluzzi, an MP close to Mr Berlusconi. 'It was Berlusconi's first taste of tough politics. He isn't used to being led a merry dance and then ambushed.'

The fear now, particularly on the financial markets, is that the ill-will generated by the crisis has severely weakened the coalition just as it faces its first really daunting policy test, tackling Italy's fearsome budget deficit - estimated at 144,000 billion lire ( pounds 60bn) this year. The government was due to publish its budget plans today, but arguments are raging within the coalition over plans to slash health and pension benefits in an bid to control public spending. Only the broadest financial guidelines for stemming the deficit are likely to be approved immediately. The markets view publication of full budget plans as a test of Mr Berlusconi's credibility and they are impatient for details.