Created: 11/24/1978

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SUBJECT: Italian Political Situation

I. Currently, thor-rrw-nt ts ronfrentederies of challenges which contribute to nountin? tension anunj and within the major political parties. Andreotti's Christian Cemocratic gcvernpent relies on tho CotMWttStS ans four ot'er parties for Itswntary ca Jori ty, and for the tine being no consensu', exists on an acceptable ilternatlvo formula, .tut an Issue by issue confrontatltn could eventually result In the erosion of .'ndrcottl's support.

?. Sany of the government's, current difficulties reflect theof Italy's broader economic and political problems. The government has run into trouble each tia* it has tried to elaborate specific aw-asures Implementing the general objectives of its proposed economicIt curb lator costs as well as the growing public sector deficit: labor probleos, pension and agrarian refom. and Italy's entry in theuropean floneury System have bicosc particularly cnnUntlM*es.

3. 'Jlthiration this year of three-year collective contraUs coveringl.Hon workers, th? problemq* restraint -ill Le an especially significant test ofgovernment'smiliary support. Qjw key question Is whether the Communis; Party and Its lator allies' can keep tneir corolwent to wage restraint. The Communists are feeling increased rank ana* file pressure lo demonstrate that the party's support for the

government's program Is producing tangible benefits In the form of

sjvcr-wnt investment and job creation.



leader! al tne party's s'jrjurt makes it respon-

sible tor government actions with no authority tn shape its lot icy. satisfactfon with the party's role In themongriented workers, many of .mom view its support of ccohiihIl austerity measuresetrayal ot labor's Interests fo- political prtivesT)

5. There are also ladlratlcrtf. thatni'MiOrv of tip Chri-.ti.ii. OuKOcra'lc and Socialistojovrnvi'iiti>pen<vnthe CoT-Tainists, think that issues re Ij ton! to AnaVto Ill'sropo* >ls might be exploited to split his parliamentary trfjority andew co.crnjent based on soae alliance between their parties. Thus, sore Ocatocratic and Socialistn the labor movement hive fee used unsupport for economic austerity measures to cultivate iaOrher sentiment in favor of higher wages and lo lure Mipport aw.iy fro* theforar-vnlst-oriented unions.


liaate of counting tension, nony factors argue.strongly an Italian government collapse In lift near tiVfu. ener-il electionstrong possibility if the ;overnment fall*, flo, party desires to be held accountable forcverrt*rMal crisis and each harbors its own reasons forn elcttfou.

The Ccasunlsts. tor example, areat the electoral trend suggested by their losses in IoijI content'-y might he con'iiwrfational election. AHhn-jnh there arc indie."tons that th? Christian Democratic party would make some gainseneral election, suny Chris'i..'* Democrats view .he current arrangement as the ucsl po-.'lble way to hold fu Communists at bay while .naklng themrcsponsiM!ity for the government's actions. Christian democrats are also uncertain aboutSocial 1steliabilityoalitionmust Htuly alternative should tht Coi-nunlsts return to the opposition.}

fjj. For their part, the Socialists :ro also unprepared for an electoral test In the lemediate future. Party leader Craxl is still working outoory and Implications of an "autonoxous policy" calculated to distinguish the Social'"sts and preswnoly capture votes froa the two !jrgrr parties. RciiCmbering the lcises thty suficred while part of*:cnler-left coali'.inn with the Christian Democrats,Socialists are nlv.un-conwiitelves to government responsibility -rile ailowin; the CvmrMlstl the lui-'r" of orw;pollling the eppesitleauj



9. Under these circtiastan-ces, party leaders are casting -tout desperately forsncral electany significant trends in their relative strengths, lhe incoiicla'.lve results of recent regional elections in northern Italy, inth?majir parties dropped compared to6 general election', present it ton'uicture and, if anything, contribut- 'o the parties*op&to the Andreotti government.

10. Part/ leaders are anxiously anticipating several events as pojslble measures afes i" their mutual relationships, 'he Chrfi'viar jlasoci'iiLiC and Cotcsuiitst PartytSc-liiltJ (or nexthi'j artyl laipseible challenge', tu Misting; loader^ ani poliii'v. Direct elections for .iwuilx".in tne European'" be fougnt on the basis of domestic issues and may he perceived eferendum on the respective parties' actions.


Ml. Keanwn'le, the parties supportingoveifviint will continueJuajTVPtheir conflicting interests in the uay-ra-day business ofUr. And particularly as they try to inpleaent then,he danger that any singlehough not decisive iny create strains beyond the parties* capacity fur Mexibil ily--risulisitep ajjd the preaaMre crisis which nejrly all the parti*; .ireo ivo

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