New Italian Prime Minister Enrico Letta will seek the backing of parliament in a confidence vote on Monday, facing severe political and economic problems that will test the solidity of his coalition government in the months ahead. The vote takes place under the shadow of the gun attack on Sunday in which an unemployed man shot two police officers and a passerby outside the prime minister's office in Rome just as the cabinet was being sworn in at the nearby presidential palace. Officials said the shooting was an isolated incident but it came amid tensions that have built up in the euro zone's third largest economy after almost two years of acute economic and social crisis. "This is another sign of despair," said lower house speaker Laura Boldrini. "Politicians have to come back to providing concrete answers to people's needs." Letta is due to speak in parliament ahead of the confidence vote at 3 p.m. (1300 GMT) in which he can expect the backing of his own center-left Democratic Party and former prime minister Silvio Berlusconi's center-right People of Freedom party. Forced into a coalition with Berlusconi after the center-left fell short of the numbers in parliament to govern alone in elections in February, Letta has pledged to try to restore confidence in the country's battered political institutions. He also has promised to address the poverty worsened by a jobless level running at more than 40 percent among young people in some areas of the country and push the European Union away from its fixation with budget austerity. With some doubt over whether his government will last a full five-year term, Letta is expected to try to pass at least a few basic reforms quickly including a change to Italy's much criticized electoral laws and a cut in the size of parliament. His cabinet, which includes a record seven women and Italy's first black minister, was shaped in part as a response to disillusion with political elites shown in the success of the anti-establishment 5-Star Movement led by comic Beppe Grillo. He will need all his diplomatic skill to keep the government on track and tensions in his forced coalition with the center-right under control given the deep suspicion that exists between the rival blocs. CAUTION Berlusconi, caught up in a legal battle over a tax fraud conviction and charges of paying for sex with a minor, is not in the cabinet but he will have a powerful behind-the-scenes influence and could bring the government down if he chose. Buoyant financial markets responded positively last week to signs of an end to the long stalemate that followed February's inconclusive national elections but many have sounded a note of caution as well. "There is a very positive sensation because we come from a period of strong uncertainty and finally there is a very defined framework," said Lorenzo Stanca, managing partner of Mandarin Capital, a private equity fund that invests in small Italian and Chinese firms. "The real tests will come in the next few weeks and months," he said. "There is not much experience in Italy of a coalition government and it will be difficult." Many in Letta's Democratic Party are finding the idea of a coalition with Berlusconi, their foe of two decades, abhorrent and the center-right, boosted by a solid lead in the opinion polls, has made little effort to strike a conciliatory note. Even before Letta's government was sworn in, the party was demanding the abolition of the IMU housing tax and the repayment of last year's levy, an election pledge by Berlusconi that will blow an 8 billion euro hole in this year's budget plans. Italian business will be hoping for a reduction in the crushing burden of tax and red tape but badly strained public finances - notably a public debt likely to top 130 percent of gross domestic product - leave Letta little room for maneuver. Reuters
