Created: 5/15/1979

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SUBJECT: Italian Situation

Despite pressing economic and public order Issues, the campaign forune parliamentary election continues to focus on the question of direct Cocrminlst participation In the next government. [ I

The most visible econdmu issue during the campaign concerns

the stalled negotiations over the the renewal of collective labor contractsoth the public and private sectors. The powerful Italian labor movement has recently stepped up its striketo press Its demands for wage increases and working hour reductions and to force Prime Minister Andreotti's weak caretaker government and private employers to complete the contract negotiations before the election. Olthough the contracts will probably not be resolved within this time frame, labor unrest is likely to increase and further heighten campaign tensions^

he campaign has already been narked by an Increase in terroristby leftwing groups such as the'Redades and

directednainst the Christian Denacratlc Party. The

nolence hasolemic between tie un is-

mists as they try to outdo each otherondemning terrorism. For the present the two parties have Joined to support the use of regular military troopsin Improving security around likely terrorist targets during the campaign. (But If the violence continue to escalate

lis sort of

mil (itinjauiy give way to stronger mutual recriminations

The substantive issues of the campaign can be reducedingle political question: the composition of the post-electoral governing formula. .The Coowmist, Christian Democratic and Socialistmajor actors In the negotiations toewalready mounted aggressive campaigns designed to maximize their post-electoral bargaining power. But evidence of voter apathy and an unusually large undecidedat betweenncouraged the parties even more than usual

A 4 "j

torotractedfollowing thegotiationsew Governmental formula

h ^Christian Democrats, Italy's largest party, are optimistic that they will improve on6 tally7 percent of the vote by one or two percentage points. Although tbe party Is united under the banner -no Cwmunistshristian Oemocratlc leader* are deeply divided over post-electoral strategy. Supporters of Prime .Minister: .

r>1nl apparently wish toooperative relationship with the Ccemunlsts-short of grantingcabinet seats-following the election. But Influential Christian Democratic conservatives prefer closer ties with the Socialists and smallerhope toovernment coalition exclude Cotnaunist support. [

., n* Conrmunist Party-Italy's second largest-cautiously predicts It mayew.polnts from4 percent total There is some uncertainty whctherthe Ccesnunists will faithfully uphold their campaign there-"either in the government or In the opoosltlon'-follcwing the election. (Some Ccoraunist leaders are considering supporting aby abstainingonfidencesome arrangement can be negotiated to give their party greater Influence over

fHC'^hat the cSSnlst rank and file would prefer to join the opposition if the party's demands for cabinet seats are rot met) *

7. The Communist attitude toward the Socialistsomewhat arhlvalent. They apparently demand that the Socialists cooperate with them to damage -Christian Democratic electoral prospects, but the Communists also seem to fear large Socialist Party gains or losses-which night encourage Christian Democratic offers of afjiQsti-electoral alliance or make thevulnerable to such offers.

8. The Social lsts--as Italy's third largest party-hold the balance of power between the Christian Democrats and Cceraunists. Itikely the Socialists will neither gain nor lose very relation to their poorercent, The Socialist Party's electoralinge on Its ability to convince dissatisfied Christian Democratic and Comrnunist voters that the Socialists are an effective alternative, ftut Socialist leaders evidently disagree strongly on the type of government which should be formed following the election) Supporters of Party Secretary Craxl appear willing tooalition with the Christianespeclally if the quid pro quoocialist as prime minister.

Followers of Deputy Party Secretary Slgnorlle, however, continue to reject participation in any goveriwnt which excludes the Conaur.lsts

9. If the results "of the electlon-as nowely--do ot significantly alter the Italian political balance of power, the Christian Democrats will undoubtedly .try to minimize internal strains by first seeking toovernment excluding the Communists; the Communists will probably press their demands fordirect cabinet role--while trying to keep the Socialists from defecting to the Christian Democrats; and the Socialists are likely to continue to refuse supporting any government opposed by the Communists. However, faced with this stalemate following the ejection, the three parties will probably be forced to scale dowr their respective demands and work out yet another compromise formula.

not seem likely to get Cabinet

ln9 HWy to be protracted, however, and nay not produce an agreement until the Christian Democratic Party has held its congress in the fall. Unless the election produces more change than is currently anticipated.ill be difficult toerr^nt which, does not at least give the Communists an Increased

rols in policy making/ even thoug seats in the next adtnTni strati oft

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