The President of Italy, Mr Oscar Luigi Scalfaro, has given himself until tomorrow to come up with a solution to last week's collapse of the government. Mr Scalfaro's talents are many but he will be up against it to produce promptly a government which can push through the belt-tightening required if Italy is to qualify for membership of Economic and Monetary Union. And even if he does, last week's events lend support to the sceptics who argue that Italy is incapable of being readied in time for membership of EMU on its January 1st 1999 start-up.
The government led by prime minister Romano Prodi was Italy's 55th since the second World War. Of more significance, it was Italy's first left-wing government since the war and the so-called Olive coalition functioned well for most of its 17 months existence. The far-left Rifondazione Communista was not part of the government but its 35 parliamentary votes helped keep the coalition in power. Rifondazione refused to agree to spending cuts in Mr Prodi's proposed Budget for 1998, forcing the prime minister to tender his resignation. The Communists have since made noises about re-forming the coalition on an agreed programme but the President is likely to look at options which don't depend on Communist support. They have insisted that there be no cuts in pensions or in welfare payments and they are opposed to EMU membership. The government aimed to cut the deficit by $14 billion and that cannot be achieved without hacking away at social spending.
Mr Massimo d'Alema, the leader of Democratic Left, which is the largest party in the Olive coalition, believes that a snap election is required; no doubt he feels his party's parliamentary strength would be boosted. Mr Scalfaro - and most of the other party leaders - worry that an election might achieve nothing in terms of political stability and they are probably right. Mr Scalfaro, in any event, calls the shots; only the President can dissolve parliament.
There is an almost macho approach adopted to EMU membership by Italian politicians - ably backed up by industrialists. They have been infuriated by doubters such as Dr Hans Tietmeyer, president of the Bundesbank and Mr Theo Waigel, Germany's Finance Minister, who have argued that EMU with the Italians on board would be a weak EMU. Italy's prospects were further questioned last Thursday when Mr Jean-Claude Juncker, the Prime Minister of Luxembourg, which currently holds the EU presidency, expressed "grave doubts that Italy can prove that convergence is sustainable". This is just the kind of talk which might bring Italians together to prove their suitability. And it is just the kind of scenario which may tempt Mr Scalfaro to propose a grand coalition, a "government for Europe".
Mr Prodi would not be acceptable as its leader to the other parties but Mr Carlo Ciampi, the ex-treasury minister and the force behind Italy's economic recovery, would be. A grand coalition would not depend on the far left or the far right for a parliamentary majority and could quickly pass a Budget consistent with EMU membership. It is essential, however, that agreement be reached quickly; otherwise the opponents to Italian membership will grow in number. In addition, if Italy is rudderless for long it could weaken commitment to membership in other countries, notably France where the Communists are also opposed to EMU and where they don't just support the government but are part of it.