Italian Prime Minister Silvio Berlusconi’s crucial talks with rebellious coalition partners resumed yesterday. The talks could result in anything from a cabinet reshuffle to a coalition collapse if no compromise is found.

Coalition leaders suspended a first, four-hour session of negotiations shortly after midnight and said they would meet again later in the day.

Berlusconi called for face-to-face discussions with all his allies after a junior coalition partner threatened to quit unless major changes were made to the government’s program.

“We are at the talks to resolve problems. But if what is proposed turns out to be the opposite of the coalition’s program there, it’s clear things can’t go well”, Roberto Calderoli of the right-leaning Northern League said.

Calderoli, vice-president of the upper house Senate, interviewed in the daily La Repubblica, appeared to throw down the gauntlet of early elections to any coalition trouble-makers

“Seeing as the program was voted for by the people, it will go back to the people to be voted on. We are holding to what was agreed and voted on. But if someone wants to change their mind...” , he was quoted as saying.

Around 40 party members are sitting around three tables to discuss politics, economics and institutional reform in what may be several days of talks to resolve a power struggle that has paralyzed Berlusconi’s administration.

<B>Tensions among allies</B>

“There’s no longer room for ambiguity, hypocrisy, games and behind-the-scene scheming. It’s decision time,” Labor Minister Roberto Maroni of the Northern League told reporters ahead of Sunday’s opening round of talks.

Berlusconi’s government has survived three years in office, making it the longest surviving administration since World War II, but the omnipresent tensions among allies have reached a new high. The next general elections are due in 2006.

It was the Northern League that pulled the plug on Berlusconi’s first government back in 1994 when it pulled out of a similar coalition in a row over pension reforms.

The latest and biggest crisis to hit Berlusconi’s rule was prompted by last month’s European and local elections in which the Prime minister’s conservative Forza Italia party lost ground to its three junior partners.

<B>Struggle for power</B>

Ensuing cabinet squabbles led to the resignation of close Berlusconi ally, Economy Minister Giulio Tremonti, and a series of ultimatums from the coalition partners.

Marco Follini, the leader of the centrist UDC party who has threatened to withdraw his two ministers from the cabinet, sent Berlusconi a list at the weekend of changes he wanted to see.

Follini’s demands target the most sensitive parts of the government program, including making Berlusconi’s flagship tax cut plan more “socially equitable”, and questioning Northern League plans to hand much more power to the regions.

The talks are expected to have a staggered start with the reforms round table and the economic discussions due to re-start two hours later. Followed by a working dinner at 9 p.m with coalition leaders and Berlusconi.

<B>Crispian Balmer</B>