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Published: Wednesday February 12, 2014 MYT 2:15:01 AM
Updated: Wednesday February 12, 2014 MYT 2:16:07 AM

Italy PM vows reforms as tensions with Renzi grow

Italy's Prime Minister Enrico Letta holds a news conference at the EU Commission headquarters in Brussels January 29, 2014.REUTERS/Laurent Dubrule

Italy's Prime Minister Enrico Letta holds a news conference at the EU Commission headquarters in Brussels January 29, 2014.REUTERS/Laurent Dubrule

ROME (Reuters) - Italian Prime Minister Enrico Letta promised new measures to lift the economy on Tuesday after weeks of tension over the slow pace of reform fanned speculation that he could be replaced as premier by his party leader Matteo Renzi.

Renzi, who took over the centre-left Democratic Party (PD) in December, has said the government would be better off calling new elections if it is unable to push reforms more effectively and has openly criticised his party colleague Letta.

Italy, the euro zone's third largest economy, sorely needs reforms to emerge from its longest post-war recession and curb unemployment, now at its highest level since at least the 1970s, but progress has been held up by the political infighting.

Letta, a low-profile moderate appointed to lead an unwieldy coalition of the PD and smaller centre-right parties after last February's deadlocked election, gave no details of the reform package, which he said would be announced on Wednesday.

But he said he was confident it would win the backing of all the parties that make up his governing coalition.

"I will propose a coalition agreement that is heavily based on the issue of economic revival," he said at an event in Milan.

The repeated criticism of Letta has fuelled talk that Renzi, buoyed by his strong victory in the PD party leadership primary in December, may claim the post of prime minister for himself.

Renzi, a dynamic and fast-talking 39-year-old mayor of Florence who openly disdains the traditional left wing in his party, is under pressure to set his own mark on the coalition both by supporters and by foes who say his status outside the government has spared him a share of the blame for its problems.

"ENERGY AND DRIVE"

As speculation swirled over his future, a PD leadership meeting to discuss the coalition's future was brought forward to Thursday from an originally scheduled February 20 and even partners in the ruling coalition spoke openly about a change at the top.

"I hope Letta shows the generosity he has always shown in his political career by opening the way to a new phase and offering his own position," said Andrea Romano, parliamentary floor leader of the small Scelta Civica party in the coalition.

"The PD has the main responsibility to give the country a government and Matteo Renzi has the energy and drive for change that have to be put to the test," he told SkyTG24 television.

Renzi, who is mayor of Florence, has made no secret of his ambition to become premier in the future but has denied aiming to take over now from Letta, saying any such change without an election would smack of the short-lived governments of the post-war period which succeeded each other every few months.

More than two-thirds of Italians also oppose changing the premier without new elections, according to an opinion poll by IPR institute, but Renzi has not let up on his criticism.

"We will see whether this government's batteries can be recharged or whether they have to be replaced," he told PD deputies, according to one parliamentarian at the meeting.

Although the political ructions are being closely watched outside Italy, the pressure on Rome from financial markets has eased considerably since the deadlocked election a year ago which brought Letta's unwieldy coalition to power.

In a sign of the wider political tensions in Rome, parliament on Tuesday rejected a bid by the anti-establishment 5-Star Movement to impeach President Giorgio Napolitano, but opposition lawmakers kept up their attacks on the 88-year-old head of state.

Letta has branded the attacks on Napolitano, who is widely credited with steering Italy through the turbulence of the euro zone crisis, as "a shameful attempt to distort reality".

(Additional reporting by Roberto Landucci; Editing by Gareth Jones)

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