THE Italian Prime Minister, Prof Romano Prodi, yesterday said the time was ripe to propose the re entry of the lira into the EU's Exchange Rate Mechanism (ERM).
Still jubilant after Sunday's election victory by his centre left Olive coalition, Dr Prodi suggested that the positive international market response to his victory had helped create the right climate for the re entry of the lira to the ERM.
Italy withdrew from the European mechanism in September 1992 and in the 3 1/2 years since has effectively devalued by almost 40 per cent in relation to its major European trading partners, France and Germany.
The resultant advantage to Italy in its trade relations with both countries has provoked serious tensions, with President Jacques Chirac of France arguing that the lira's instability on currency markets has had a negative knock on effect on the franc.
Dr Prodi said: "I think we're in good enough shape to re enter the ERM. The economic indicators are very clear, there's a situation of calm and confidence . . . As for when, I cannot answer that because the re entry has to be discussed with our European partners."
Dr Prodi argued that the reentry would send a clear and positive signal to Italy's European partners. "The most serious complaint that foreigners make to me all the time is that they don't understand us. In that case, my message today is simple - our country has got to count for more in international affairs."
He added: "I know the Anglo Saxon world, they have the idea that we Italians are too Machiavellian, too complicated. Well, I want to be clear and easily understood."
In a wide ranging discussion, Dr Prod said that he had "no hesitation" about advocating the privatisation of the state controlled telecommunications group, STET, perhaps within 12 months. "The privatisation must be done in a manner that is compatible with creating an Italian company that can be a leader in the international telecommunications world," he said.
Asked about the possible composition of his future government, Dr Prodi confirmed that the current caretaker Prime Minister, Mr Lamberto Dini, may well be appointed either Foreign or Treasury Minister. Mr Dini's own Italian Renewal movement contested Sunday's election within the Olive coalition, an alliance, dominated by the ex communist Democratic Left (PDS).
Dr Prodi also said that he would waste little time forming his government; he hoped to have it in place shortly after parliament reconvenes on May 9th.
Some indication of the difficulties which lie ahead came later from Mr Fausto Bertinotti, leader of Rifondazione Communista. The Olive coalition, which did not include Rifondazione, won 284 seats in the Chamber of Deputies, 32 short of an absolute majority, and therefore will have to rely on the support of Rifondazione to get legislation through the lower house,
At a separate news conference Mr Bertinotti said: "We've already said what we had to say, but I'll repeat it. We will vote this government into office as an act of responsibility, but we won't get involved in trade offs about our programme; nor we will look for seats in government. . . As for holding this [new] government to ransom, I hope that the government will be pressurised by workers' movements."
He added: "I'm betting on the [economic] growth of the country and that there will be such a demand for measures relative to unemployment, minimum wage levels . . . that the centre left will have to listen."
Asked if he could envisage a situation in which Rifondazione might bring down the government, he said he hoped this would not happen. If this government were to introduce a bill like Dini's pension reform of last year which cut back pension benefits, then we would never vote in favour of that," he said.