News Analysis: Italy's need for electoral refrom higher than ever, but needs political muscle for changes

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ROME, Oct. 31 -- Battling slow economic growth, rising unemployment levels, falling tax revenue, and rising debt levels, the government of Italian Prime Minister Enrico Letta has so far made little progress in the area many analysts say Italy needs most: electoral reform.

The fact that the previously unheralded Letta become prime minister is evidence of the country's broken political system.

A national vote in February failed to provide a clear winner with three large blocs -- headed by former Prime Minister Silvio Berlusconi, comedian-turned-activist Beppe Grillo, and Pier Luigi Bersani -- assuring no single coalition would have enough votes to form a government on its own.

The result was a two-month standoff in which Italy had no working government, as the country's endemic problems grew worse.

Letta become prime minister in April, atop a fragile "grand coalition" that included former Bersani supporters, Berlusconi backers, and several small parties. Many members of the coalition had long histories of opposing other members, making the government inherently unstable.

But with Berlusconi mired in legal troubles and after winning a key confidence vote earlier in the month, the Letta government has never been stronger.

Earlier this month, he promised some kind of electoral reform by the end of the months, but the degree of political change needed to avoid a repeat of the impasse from earlier this year does not appear to be in the works.

"The economic issues, the debt issues are very important but are argument can be made that political reform should be a top priority in order to assure political continuity going forward," said Gianfranco Gallo, a political risk analyst with Hildebrandt and Ferrar investment bankers.

In Italy, the party winning the most votes gets enough bonus seats in parliament's lower house to guarantee a majority, but no such bonus exists in the Senate making another stalemate possible - some in Italy even say likely - unless dramatic changes are made.

"It's a difficult situation because Letta's supporters may feel they have the political strength to push through a reform," Gallo said. "But until a reform is passed, it's unlikely any figure will have that kind of political strength."

"Electoral reform" has been a buzz phrase in Italy for years, but until now no political leader has been eager to dramatically alter the system he or she used to come into power. Looking back at his messy path to the prime minister's office, it is unlikely Letta shares that view.

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