Court Gives Prodi Green Light to Govern Italy

Italy's high court, the Court of Cassation, said Prodi had won the lower house by a margin of some 24,000 votes against Premier Silvio Berlusconi's conservatives -- a margin almost identical to the one previously announced.

Berlusconi won the popular vote for the Senate, but Prodi gained a two-seat majority due to a complicated system of bonuses. The number of contested ballots in the Senate, however, was not expected to change the picture.

The confirmation puts an end to days of political uncertainty in Italy and clears the way for the formation of a center-left government under Prodi.

Even in the run-up to the decision, Prodi pressed ahead with preparations to take power. He held an informal meeting on Wednesday at his Rome headquarters with the mayors of Italy's three largest left-controlled cities, Naples, Turin and Rome, to discuss local government taxation.

But the 69-year-old Berlusconi and his allies showed no signs of conceding defeat before the court verdict.

The prime minister has maintained an uncharacteristically low profile since a weekend statement in which he offered a power-sharing agreement with Prodi, on the grounds that his coalition took almost 50 percent of the vote.

But his center-right coalition warned in a statement late Tuesday that lower courts may have accumulated errors in the rush to get information to the supreme court for its ballot review.

Court urged to investigate suspected "irregularities"

Mirko Tremaglia, Italy's minister with responsibility for Italians abroad, had insisted the court investigate "irregularities" in the foreign vote before rubber-stamping the election result. "I'm not doing this to destroy the whole election, but we need to have an inquiry to see if Italians around the world were able to vote or not."

"This is something which the court has to take charge of."

Provisional results handed a narrow victory to Prodi more than a week ago, but they have been challenged by Berlusconi, who demanded a review of contested votes.

Close run contest needs lawmakers' decision

Prodi's coalition won control of the lower house Chamber of Deputies by 25,224 votes, or 0.06 percent of the more than 39 million cast in the cliffhanger polls in a turnout of more than 83 percent, according to provisional results.

The center-left also won a two-seat advantage in the Senate, which was decided on a regional basis, even though it won nearly 1 percent fewer overall votes than the center-right in the contest for the upper house.

Berlusconi has unsuccessfully pressured Prodi to begin negotiations on a limited power-sharing agreement -- given that just under 50 percent of the electorate voted with the outgoing government -- saying a failure to do so would lead to instability.

IMF calls for quick action

The International Monetary Fund (IMF) called Wednesday on Italy's new government to get to work quickly to address "tremendous" problems facing one of Europe's biggest economies.

IMF chief economist Raghuram Rajan said it was still early days in Italy after a knife-edge election that appears to have been won by a center-left coalition led by Romano Prodi.

"But nevertheless the policy challenges facing Italy are tremendous," he told a news conference, citing the country's high fiscal deficit and public debt.

"There is an important need for both macro(economic) policy reform but also structural reforms in Italy to increase the level of competitiveness across the board," Rajan said, presenting the IMF's semi-annual World Economic Outlook.

"I am hopeful the new government will seize the policy opportunities and do far more, but of course we have to wait and see."

Investors are fretting over Italy's economic direction after the election. Prime Minister Silvio Berlusconi has refused to concede defeat, while Prodi would have to manage an unwieldy coalition if he does take power.

The IMF official also played down speculation that Italy might be forced to quit the 12-nation eurozone.

"I think and I hope that there is very little chance that Italy will leave the euro. And so I think at this point it is just speculation and I don't see the strong basis for it," he said.