Italy unveils new government after two-month deadlock as Berlusconi becomes the key man

ROME - Agence France-Presse

Italian prime minister-designate leftist Enrico Letta (R) shakes hand with President Giorgio Napolitano after he announced his new government following their meeting at the Quirinale presidential palace on April 27 in Rome. AFP photo

Italy's prime minister finally unveiled a new government on April 27, breaking a two-month stalemate that shook market confidence in the recession-hit country and tested the patience of European partners.

Centre-left moderate Enrico Letta named as his deputy Angelino Alfano, from the centre-right party of former premier and billionaire tycoon Silvio Berlusconi.

Fabrizio Saccomanni, a director at Italy's central bank, was handed the post of finance and economy minister, tasked with dragging the eurozone's third-largest economy from its worst recession in 20 years.

Emma Bonino, a former European commissioner, will be the new foreign minister in a new government with a "strong female element," noted Letta.

Alfano will also hold the post of interior minister while his predecessor in that job, Anna Maria Cancellieri, will run the justice ministry.

The new cabinet was expected to be officially sworn in on April 27. The 46-year-old leftist moderate Letta also officially accepted the role of prime minister, as the constitution requires, after forging the hard-fought deal between his Democratic Party (PD) and Berlusconi's People of Freedom party (PDL).

President Giorgio Napolitano, 87, who agreed to serve an unprecedented second term as head of state, said it was "the only government possible and we could not wait for it to be formed." He said the "grand coalition"-style government formed between the bickering two main parties from the right and the left should clear the way for it to win a vote of confidence on Monday in Italy's two main chambers of parliament.

Grasping Letta's hands, he called for "the greatest possible cohesion" in the new team. Letta has said he wants to move quickly to tackle the social fallout of a painful recession and Napolitano had urged him to include younger ministers and women in his cabinet to help renew the country's tired political scene.

He is expected to unveil his programme in a parliamentary session on April 29 after sealing a deal that some still believed unlikely over the weekend.

But clinching cross-party unity proved tricky, especially with the scandal-tainted Berlusconi, who had insisted on the abolition and repayment of a controversial housing tax introduced in 2012.

Such a move would set the budget back some eight billion euros ($10.4 billion) in the debt-wracked country.

Berlusconi the winner

Former comedian Beppe Grillo, head of the Five Star Movement protest party which won a quarter of the vote to win third place in February's elections, accused the left and right of ignoring those who had voted for change.

"Over eight million Italians who voted for the Five Star Movement are considered intrusive, dogs in Church, third wheels, despised as if they were passing jerks to be pitied," he said on his blog.

The alternative to a deal would likely have been fresh elections - which neither side would necessarily have won with the majority needed to govern.

Berlusconi ruled out his own inclusion in the cabinet, but his critics said the tycoon was the real victor of the institutional crisis which has gripped the eurozone's third largest economy.

In two trials due to resume next month, he is appealing a tax fraud conviction and defending himself on charges of having sex with a 17-year-old escort girl - but his popularity levels have recently been on the up again, giving him a certain leverage with Letta.

He said he set "no conditions" for his support in forming the new government. "Therefore, we contributed to being able to form a government in a short time," he said.