Italian PM fails to pull the plug on Berlusconi

Yesterday should have been the day the lights went out at one of Silvio Berlusconi's three private television stations.

That was the deadline set almost two years ago by Italy's Constitutional Court in an attempt to limit Mr Berlusconi's monopoly on the private broadcasting sector. That was also the promise made by the centre-left parties when they won last April's elections.

So the fact that his networks stay unchanged this morning is an embarrassment to the government.

The fact that the cabinet was forced to rush through a decree law, extending the Constitutional Court deadline, only underlines the difficulty Prime Minister Romano Prodi and his team have had in coming to grips with the basic problems facing the country in their first 100 days in office.

Real change is proving hard to promote as the patchwork of parties supporting his government have resorted to old-fashioned in-fighting and power play. The next few months will present Mr Prodi with a series of headaches that will make or break his government.

Top of the agenda is a rigorous 1997 budget, which the government must push through if Italy is to have any chance of meeting the Maastricht criteria on European Monetary Union by the end of the century.

Mr Prodi wants to slash 32 trillion lire from an already strapped budget to bring the deficit down to 4.5 per cent of GDP - not yet at the 3 per cent level required by Maastricht, but getting there.

The prospect of such drastic surgery is already extracting winces of pain from industry, and protests from the hard-left Rifondazione Comunista party, on which Mr Prodi depends for his majority.

To be convincing, the budget will have to entail swingeing cuts to health and pensions, where there is little fat left to cut.

Even Mr Prodi's deputy, Walter Veltroni, has wondered aloud whether the sacrifices required for Maastricht are worth it, and whether the goals and timetable for monetary union should not be revised.

The growing pessimism about Italy's prospects in Europe is generating fears of social unrest and - more immediately - political upheaval.

Already the separatist Northern League is putting flesh on the bones of its demands for secession by suggesting that the affluent northern third of Italy adopt the Euro while the rest pay the price for the country's desperate public finances and stick with the lira.

Rifondazione Comunista, meanwhile, is playing an un- nerving game of brinkmanship by threatening to withdraw support on a series of issues, including the budget, while the centre's more restive elements are whispering about breaking away in search of new political partners on the centre-right. The chances are that Mr Prodi's government will survive, if only because the present parliament offers no obvious alternative. But the television issue, now hanging awkwardly over the government as deputies return from their holidays, does not bode well for what promises to be a hotly-contested autumn.