Italy dissolves parliament, Monti mulls future

Italy's head of state has dissolved parliament and opened the way to a February election, with doubts growing over whether outgoing Prime Minister Mario Monti will participate in what promises to be a bitter campaign.

Monti resigned on Friday a couple of months ahead of the end of his term of office, after his technocrat government lost the support of Silvio Berlusconi's centre-right People of Freedom (PDL) party.

For weeks, speculation has swirled over what role Monti will play in the election, which cabinet confirmed would be held over two days on February 24-25.

The former European commissioner, appointed to lead an unelected government to save Italy from financial crisis a year ago, has faced growing pressure to seek a second term and earlier this week Italian media widely reported he would do so.

That now seems far less certain, as Monti has had to digest opinion polls that suggest a centrist group headed by him would probably come a distant third or even fourth in the election, expected to be won by the centre-left Democratic party (PD), led by Pier Luigi Bersani.

"The outcome of the election may well not be all that favourable and the question is where that would leave his own credibility and also his reform agenda," a person close to Monti told Reuters.

Italy's main newspapers reported on Saturday that he was inclined not to run, partly because of disappointing opinion polls and partly because of doubts about the quality of the centrist parties that would be using his name.

Another source familiar with the discussions that have been going on between Monti and these centrist groups said he was no longer in direct contact with his potential allies and was now thinking things through on his own.

"It's very open, Monti's looking at all the possibilities and thinking," the source said. "The thing is that without him, the centrist project doesn't make any sense."

Several centrist politicians who had been hoping for Monti's endorsement appeared almost resigned to going on alone.

"Monti would have given more significance to the initiative but it doesn't change things," Ferdinando Adornato, a member of the centrist UDC party told TGCom 24 news television. "What Bersani and Berlusconi are offering is not enough to change the situation from what it was before Monti arrived."

TAX HIKES

European leaders including German Chancellor Angela Merkel and European Commission President Jose Manuel Barroso have called for Monti's economic reform agenda to continue but Italy's two main parties insist he should stay out of the race.

"We underlined the fact that as we're going into elections with a non-elected, technocrat government, that government, in the person of the prime minister, should remain outside the contest," Fabrizio Cicchitto, PDL leader in the lower house of parliament said after meeting President Giorgio Napolitano.

Italians are weary of repeated tax hikes and spending cuts and opinion polls offer little evidence they are ready to give Monti a second term. A survey this week showed 61 percent saying he should not stand.

Berlusconi, who was forced to make way for Monti in November last year as Italian borrowing costs surged, has stepped up attacks on his successor in recent days and welcomed his resignation on Friday.

"Today the experience of the technical government is finished and we must hope there will never again be a similar suspension of democracy," he told reporters.

Monti, who has kept his cards close to his chest, is expected to outline his plans at a news conference on Sunday.

Rather than announce his candidacy or endorse a centrist alliance to run in his name, two options widely touted in recent days, he may simply present a summary of the reforms his technocrat government has achieved and those still required.

"On Sunday, he will probably only present a policy memorandum, there is unlikely to be any decision on any more direct involvement in the campaign until after Christmas," the second source said.

This would put flesh on the rather nebulous "Monti agenda" which has been a buzz-word of Italy's political debate since it became clear he was considering staying in front-line politics.

It would then be up to the political parties to commit to or reject the priorities set out.

By playing for time, Monti would run less risk of being caught up in the crossfire of what promises to be a messy and bitter campaign and would still be free to step into the fray later on, depending on opinion polls.