Created: 4/9/1979

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SUBJECT: Italian Political Situation

Tbe Andreotti yOvernment--wh1ch was supported In parliament by fivelast January when the Communists withdrew their backing. The parties' subsequent failure to agree on anformula recently feted the dissolution of parliamentallew election. The question of direct Comaunlst participation in goverraaent will be the main issue ia the election, which will probably be scheduled for early June.

AndreottVs collapse and the protracted negotiations toew formula have postponed efforts to treat Italy's most pressing problem*;. Debate over the three year economic stabilization plan, the renegotiation of major, labor contracts, and the appropriation of supplementary funds for the military budget have been sidetracked until the polj^lcal situation is clearer. Meanwhile,L>CJlw1ty has increas

3. The Comstunlst leadership provoked the current crisis oeciuse

it was convinced that supporting the government had damaged its image anong both rank and file and noderate supporters. The Comeuoists. however, have not abandoned their overall strategy, which Is aimed at achieving an eventual governing alliance with the Christian Democrats-Comnunlst chief Berllnguer's "historiche Communist Party congress reaffirmed this policy last week. (Jut the party clearly is ready to return to thejipposition If It cannotabinet role, or something very

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4. For their part, the Christian would have been quite satisfied to continue the existingwhich the Communists were co-responsible for government actiors, but had only limited Influence In policy making. Although some Christian Democrats hoped to avoid a

break with th* Corr-unlm,* convinced that th* crHIt night prod th* Socialists Intoovernment coalition Uu dependent on the Coc-Bur.lsts. But Christian Ocecnti on both sides tee* resolved that in flection Is tht only way ta determine th* mor* feasiblej

5. This situationth* Socliltstsainful choice ind is, Inirect challenge to their policytsfgntd to distinguish thee froa th* two larger parties. Satefivor using th* opportunity to move out of the ConBuelsts' shadow byew coalition with the Christian Democrat-, other Soctil-Ists rtfuse toovtrnmtnt excluding th* Ccamunlstslno protect the Socialists from posslblt Comnunist attacks. Toisastrous party split over the issue, the Socialists are for th* moment (iking refugeunity of the left" policy. They ire resigned to risking an election, rither thanefinitive decision at this point. '

6. In fact, an election became inevitable when the three party minority government recently proposed by Prim* Minister desegnate Andreotti failed to obtain Communist and Socialist support ind consequentlyarliamentary vote of confidence. Although the three parties apparently hoc* an election will simplify their options, llie results ofote will prubably only confirm th* current impasse. It is difficult te predict likely election results, but--iccording to recent polls--tne Communists may decline several points, the Christian Democratic tally may rise slightly and the Socialists may hold their ownitrelation to their respective standings in6 vot*.* j

7. The three major parties arc thus likely to be facedlection with essentially the same htrd choices. Unless they areto coperotracted period of Instability and goverrawntal paralysis, political leaders wtl! probably be forced to workompromise formula,formula would have to allow the Communists to claim that they were part of the government, whll* permitting tht Christii Oeatocrtts to maintain thit they had held the line--an Increisingly difficult_tisi. in view of the troubles encountered by the Andreottl exper inenyf 1

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