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Italy set to swear in new government after deadlock

Italian Prime Minister Enrico Letta (R) shakes hand with President Giorgio Napolitano on April 27, 2013 in Rome
Italian Prime Minister Enrico Letta (R) shakes hand with President Giorgio Napolitano after he announced his new government following their meeting at the Quirinale presidential palace on April 27, 2013 in Rome. Italy prepared to swear in a new coalition

Italy's new coalition government is to be sworn in on Sunday, bringing fresh hope to a country mired in recession, after two months of bitter post-election deadlock watched closely by European partners.

Prime Minister Enrico Letta is expected to be the first to take the oath of office at a ceremony led by President Giorgio Napolitano, who appointed him after the centre-left won February elections but without the majority needed to govern.

The ceremony was set to begin at 0930 GMT in Rome.

The 46-year-old Letta, one of the European Union's youngest prime ministers, is expected to unveil his programme in a parliamentary session on Monday, before the government is put to a confidence vote in parliament on Tuesday.

Silvio Berlusconi (L) stands beside PDL secretary Angelino Alfano during a campaign rally January 25, 2013
Italy's former prime minister Silvio Berlusconi (L) stands beside centre-right People of Freedom party (PDL) secretary Angelino Alfano during a campaign rally January 25, 2013 in Rome.

The political deadlock had thwarted efforts to end the worst recession in Italy in 20 years, and Letta has said he wants to move quickly to tackle unemployment -- which currently stands at 11.6 percent -- and boost growth.

The leftist leader also wants to move away from the austerity imposed by his technocrat predecessor Mario Monti to protect Italy from the eurozone debt crisis -- a promise which will be followed closely by investors concerned about the country's two trillion euro debt mountain.

Italy's debt will rise to 130.4 percent of gross domestic product this year, according to an official forecast in April.

Unveiling his new cabinet on Saturday, Letta said he was proud to have included younger ministers -- the average age is 53 -- and more women to help renew the country's tired political scene and rebuild confidence in the discredited political class.

Letta is "the doctor for a sick Italy," said Eugenio Scalfari in La Repubblica daily, adding that the Tuscan premier had kept his promise for a cabinet of "expertise, freshness, non divisive names."

Experts said the exclusion of any of Italy's big political names from the team was a bid to avoid infighting within the coalition and acknowledge a growing call from the electorate for change.

"A generation has left the scene. Those who occupied centre stage in the two biggest parties and the previous governments have been handed the bill," said commentator Mario Calabresi in La Stampa.

Stefano Folli, political expert for Il Sole 24 Ore newspaper, noted "many women, many new faces, and the exclusion of almost all of those who represented the historical dispute" between left and right.

Emma Bonino, shown in a file picture has been named by Prime Minister Enrico Letta as Italy's new foreign minister
Emma Bonino, a former European commissioner and rights campaigner, shown in a file picture, has been named by Prime Minister Enrico Letta as Italy's new foreign minister in a new coalition government to be sworn in Sunday.

Letta named as his deputy Angelino Alfano, protege of former premier Silvio Berlusconi and secretary of the centre-right People of Freedom party (PDL).

While the appointment appeared to be aimed at appeasing the right, it angered critics of the scandal-tainted billionaire tycoon, who they claim will have a grasp on the reins of power.

Berlusconi -- currently on trial for paying for sex with a 17-year-old prostitute -- has seen his popularity ratings rise, and fought to have his right-hand man in pole position. Alfano will also become interior minister.

Fabrizio Saccomanni, a director at Italy's central bank, was handed the post of finance and economy minister, while Emma Bonino, a former European Commissioner, will be the new foreign minister.

Clinching cross-party unity had proved tricky, with Letta's Democratic Party (PD) loath to work with its hated rival Berlusconi.

"It's a return to political reality. Everyone had to give way on something. There was no turning back to how things were before," said political columnist Massimo Franco in La Stampa.

The only alternative to a deal would have been fresh elections, which neither side would necessarily have won with the majority needed to govern -- although recent opinion polls show that Berlusconi might have emerged victorious.

The new government is bound to bring some relief to anxious international observers, after the warning from ratings agency Moody on Friday of an "elevated risk" that the political stalemate would harm investor confidence.

Letta has promised to act fast to carry out key reforms -- such as tackling the complicated electoral law which created the deadlock in the first place -- but the diverse make-up of the government and internal divisions within the centre-left PD may make his job more difficult.

"The Letta government is a time-bomb for a (centre-left) party in dissolution, with its members in revolt and which in parliament will be forced to co-manage the personal problems of its ex-enemy" Berlusconi, said Antonio Padellaro in the left-wing Il Fatto Quotidiano.

Political analysts have warned that the coalition team may have a limited life of one-to-two years before bickering parties or rebel politicians bring it down and fresh elections are held.