ITALIAN SITUATION

Created: 1/16/1980

OCR scan of the original document, errors are possible

I"-' . CENTRAL INTELLIGENCE AGENCY

NATIONAL FOREIGN ASSESSMENT CENTER

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'Situation

Short-tern prospects for Ital tan Prime Minister Cossiga's shakyhave itproved somewhat in the wake of the Soviet invasion; of Afghaniaction ha$ once again brought to the fore the issue of-the Italianrelationship with Moscow, and the parties supporting Cosslga may nowreluctant torisis in wMch the main issue would be thatparticipation in the government, (tcsslga will not be strong enoughwith Italy's persistent public order en3 economic problems, however, andstalemate will favor Communist movement toward participation In

Glthouqifl the Italian Communistsesolutionhe European Parliament expressing "gravest censure" of the Soviet action Inparty has taken care not to strain Its relations with Moscow too muc3 esult, the question of the party's independence, and, hence Us suitability for Inclusionovernment, has acquired new strength. Tha other parties may now submerge their differences and sustain theanother few months, at least. Cosslga has tried to capitalize on this roca by dealing with International questions in ways that enhance his government's starure--part1cularly among Italy's allies. The Prime Minister any hope that Italy's tenure as EC president and Us role as host of the Venice Economic Summitune will provide additional reasons for puttingovernment crisis.

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Working against Ue extension of Cosslge's mandatehe growing

Impression in Italy that effective -government Is Impossible without at

some Communist support. Cossiga has been unable to muster parliamentary majorities for measures to curb Inflation, conserve energy, reform the pension system, or deal with other pressing problems. Terrorist activity appears to be on the rise, despite theecent, extraordinary anti-terrorist measures. Labor unrest is increasing. Deteriorating economic conditions have generated worker demands to renegotiate collective wage contracts.

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The Communists' prospects are also strengthened by the turmoil In the

Socialistis an essential component of any non-Communist

Reemergtng divisions among Socialists have weakened the party's resolve toon key parliamentaryessential prop keeping Cossiga'scoalition inhave given renewed

to those Socialistsovernment including the Communists. Widespread uncertainty over the reliability and predictability of the Socialists has encouraged many Christian Oemocrats to acc*pt tti frvjgtctew governing arrangement including some Communist backing, j

ne wepxinists

'apparently nave uui-jeu uieir cause py succeswu-iy muoiimny Iheir constituents on various Issues to exploit the perception of governmental impotence and to tout the advantages of an option including the Communists.

(Jfci balance the non-Communist parties, hopingelaxation in International tensions, probably will prefer to keep Cossiga Inhile longer rather than face an Immediate confrontation over Communist participation in the government. The continued Communist insistence on cabinet seats as the price forew government essentially nullifies the other parties' apparent willingness to grant less sweeping concessions. The Socialists may succeed In papering over thair differences and decide to allow Cossiga to survive, but perhaps only until the Christian Democrats havehance to sort out their options. The Christian Oemocrats, whose party congress opensly February, probably will leanovernment formula with some Connunist involvement short of cabinet seats; they may try to promote Communist and Socialist cooperation bt threatening th.em with early parliamentary elections, which neither party wantsT/

GJunhe Cosa-fga government survives the Inevitable pitfalls, it Is likeTyto remain^neffectivgj This will give the Communists the opportunity to capitalize on growing public dissatisfaction, thus Improving their prospectshe nationwide local elections in JuncTJ

Original document.

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