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Italian PM promises big reforms in coming year

"2007 will be the year of the turnaround."

Romano Prodi, Italian prime minister

Italian Prime Minister Romano Prodi promised sweeping reforms to cut down on bureaucracy, improve competitiveness and spur growth as he outlined an ambitious agenda for next year on Thursday that he hopes will reverse a recent drop in his approval rating.

Speaking at a traditional end-of-the-year news conference, Prodi said his center-left government plans to minimize business red tape to allow companies to be set up in one day, attract foreign investment and unveil a new environmental policy and an energy savings scheme.

Liberalizing sectors of Italy's rigid industry is also high on the agenda of the prime minister, who said that "no area can be protected from competition."

Prodi, who took over at the helm of a center-left coalition after winning April elections, also suggested he might not seek another term if he completes his mandate, set to expire in 2011.

"I think five years' work are enough," said the 67-year-old former EU Commission president. Prodi already served as Italian prime minister between 1996-1998.

Prodi said a pension reform that has raised the prospect of massive confrontation with Italy's powerful unions and possibly of a strike will not be harsh. The reform is seen as a major test of cohesion for the ruling majority, which is still reeling from having pushed through parliament a controversial budget for next year.

"The coalition will decide as a whole, with unions and business representatives," Prodi said, seeking to play down mounting tensions over the pension issue.

Prodi offered few details about how to implement his agenda, as government officials are set to work them out during a two-day gathering in the southern Italian city of Caserta on Jan. 11.

But he insisted that spurring growth in the euro zone's third-largest economy would be the main goal of his Cabinet's action in the new year.

"2007 will be the year of the turnaround," he promised.

But with an unwieldy coalition and minimal majority in parliament, Prodi faces a tough challenge. Opposition politicians were quick on Thursday to label the government's agenda as unrealistic.

"Lying, lying, lying!" said Roberto Calderoli, a senator with the right-wing populist Northern League party.

Prodi has seen his popularity, and that of his government, decline in recent weeks, according to opinion polls published in the Italian media.

The drop was largely attributed to a tough budget that includes 35 billion euros (US$46 billion) in revenue-raising measures and spending cuts.

The budget has been criticized at home and abroad as relying too heavily on tax hikes rather than tackling public spending.
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