Italian government battles to avoid collapse

ROME - Italy's government has urged rebel ministers to return to the cabinet to avert a collapse that would force elections that Prime Minister Silvio Berlusconi would likely lose.

The future of Berlusconi's centre-right government has been in doubt since the centrist Union of Christian Democrats (UDC) walked out on Friday demanding sweeping policy changes after the coalition suffered heavy losses at a regional election.

If Berlusconi cannot coax the UDC back with promises of new measures to boost the ailing economy and help poorer Italians, he has said he will dissolve the government, forcing a general election a full year ahead of schedule.

Interior Minister Giuseppe Pisanu, who is reportedly already preparing for an election that could be held as early as June, said the crisis "could get more complicated unless common sense, good will and good faith come into play soon".

Back-room talks between the coalition parties continued on Sunday and by Monday Berlusconi -- who has spent the weekend at his luxury villa in Sardinia -- is expected to return to Rome to explain the situation to President Carlo Azeglio Ciampi.

If he can present Ciampi with a new government, the crisis may be over, giving him one year to improve the centre-right's electoral prospects, but with a stagnant economy and rising budget deficit, his tax cut plan looks in doubt.

The UDC and other cabinet sceptics are worried Berlusconi might try to buy himself a victory by splashing out on income tax cuts. They want any spare cash to be directed to low-income families and the under-developed South.

Even if Berlusconi can persuade the four UDC ministers to return to his four-party cabinet -- by promising policy changes and a reshuffle -- he will have suffered severe political damage, political commentators said.

Under Italy's constitution, Berlusconi will almost certainly have to resign, albeit temporarily, to present a new cabinet to the president and parliament -- stopping him from achieving an unprecedented full five-year term with a single administration.

"It's not just the uncertain outcome (of resigning) which worries him. It is also the fact that it puts in doubt the image the man has built around himself in recent years," read an editorial in Italy's leading daily Corriere della Sera.

- REUTERS