Italian coalition offers olive leaf to Communists

Leaders of the caretaker Prime Minister Romano Prodi's centre- left coalition said yesterday that they were willing to compromise with hard-line Communists in order to form a new government. The Communist Refoundation party responded to the offer by giving its leader Fausto Bertinotti the go-ahead to begin negotiations.

Mr Prodi's Olive Tree coalition said it would ask Communist Refoundation to approve the budget as proposed to parliament last week in exchange for changes to other parts of their programme, such as the introduction of a 35-hour working week.

Mr Prodi quit last week, after Refoundation refused to back the budget plan which includes $3bn (pounds 1,8bn) in pension and other spending cuts, which the government deems vital if Italy is to enter the European economic and monetary union.

The Olive Tree coalition warmed to Mr Bertinotti following a meeting with President Oscar Luigi Scalfaro, during which they asked him to reconfirm Mr Prodi as prime minister. "We think that we can and we must rebuild the parliamentary majority which emerged from the April 1996 elections," said Mauro Paissan, leader of the Greens party.

President Scalfaro has said he will decide by today whether to call early elections, ask Mr Prodi to try to form another coalition, or give the task to someone else.