Palermo, Italy — The death of investigating magistrate Giacomo Caccio Montalto last month shows what can happen to a Sicilian judge who does his job too well. Judge Montalto was one of the first Sicilian judges to seriously apply new anti-Mafia legislation in his west Sicilian district of Trapani. He reportedly helped in the discovery of a cache of 87 kilos of heroin in a shoe factory in Florence owned by a Sicilian.
A week after the discovery, though, the judge was shot. His death demonstrates only one of the many difficulties in implementing new laws against the recently recognized ''new'' Mafia, a bold and ruthless organization that makes its principal profits on the international drug trade, and that is willing to eliminate practically anyone who gets in its way.
It makes the old Mafia, by comparison, seem tame.
Police efforts to fight the new Mafia have been hampered by the Sicilian public's general fear of the Mafia, which has deep cultural and historical roots on the island. With the recent escalation of violence in Sicily, though, there are signs that the Sicilian public's ambivalent attitudes about the Mafia may be beginning to change.
New anti-Mafia legislation was passed last September, after the assassination in Palermo of Police Gen. Carlo Alberto Dalla Chiesa, who had been sent by Rome to coordinate anti-Mafia investigations.
In the outcry after his death, the Italian Parliament bowed to popular pressure and passed additional anti-Mafia legislation, and gave General Dalla Chiesa's successor, Emanuele Di Francesco, more powers.
The new legislation gives law enforcement officials wider powers to inspect the finances of suspected Mafia members; permits the seizure of Mafia funds; gives the power to prosecute anyone suspected of associating with known Mafiosi; and allows closer inspection of any companies awarded government contracts.
But the new laws have only begun to be put into action, and for this reason the murder of Judge Montalto came at an important moment.
''Before the new laws are put into effect, the Mafia is trying to launch a counteroffensive,'' said Pino Arlacchi, a sociology professor at the University of Consenza and a well-known Mafia expert, ''in order to intimidate policemen and magistrates.''
The new Mafia that is launching this attack has sprung up in the last few years. It is composed not only of the old clans but also of ambitious newcomers. The new Mafia has transplanted the once well-known French drug connection to Sicily, which has now become a major manufacturing and transfer point for heroin bound for the United States and Europe.
US Drug Enforcement Agency officials estimate that the Mafia's share of the world drug trade is now worth some $1.35 billion.
The new Mafia has had an important impact on the Sicilian economy with its hidden income and drug profits. It recycles drug money into more respectable enterprises.
But the new Mafia does not observe the rules of the old Onorata Societa, the ''honorable society,'' where the paternalistic don traded favors for other favors, and dispensed his own personal brand of justice on his turf.
The new Mafia is a vicious free-for-all, a constant battle for control of the drug trade, where any newcomer can aspire to become a boss. The rising number of murders in and around Palermo over the past three years has been attributed mainly to inter-Mafia warfare, and the factions have come to be known by the names the police have given them: the winners and the losers.
Clans in both camps have had many close family members and friends killed, or disappear in what is known as the lupara bianca, or ''white lupara,'' named after the sawed-off shotgun Mafiosi in the countryside used. In 1981, the number of murders in the Sicilian capital of Palermo reached a new high of 151, with an additional 100 instances of lupara biancam.
Walking around Palermo, though, one can see the benefits of a huge influx of money. Women in mink coats gaze at shop windows that feature the products of Elizabeth Arden, Guerlain, and Gucci. Heaps of gold jewelry set with precious stones are on display behind plate glass. It is hard to believe that Sicily is one of the most underdeveloped regions in Italy, and receives massive amounts of financial aid from a special southern Italy regional development fund.
According to one of the local politicians, Palermo ranks about 80th in production compared with other Italian cities, but ranks 6th in consumption. The conclusion is that there exists in Palermo a significant submerged economy.
Another distinguishing aspect of Palermo, and striking to the visitor, is the extent to which the Mafia is embedded in Sicilian culture, even though it is ritually condemned at the highest levels.
Sicilian businessmen in one of the fanciest restaurants in town joke as to which one of them looks more ''mafiosi,'' drawing their thumbs diagonally down across their cheeks in a time-old gesture signifying Mafia, taken from the old practice of slashing the cheeks of those who dared to defy the clans.
Even respectable, middle-class families have coffeetable picture books of the Mafia, with narratives of how the organization's past has intersected with the main events of Sicilian history.
But Palermitans fear now that the new Mafia is becoming unhinged and that the social constraints, however dubious, that influenced the old Mafia are becoming irrelevant. Even the dominant Christian Democratic Party, which has held power in Sicily for 35 years and is widely considered to have close Mafia ties, has become a victim of the new Mafia. In 1979 Michele Reina, the provincial secretary of the Christian Democratic Party, was killed, and in 1980 Piersanti Mattarella, the reform-minded president of the Sicilian region, was also.
But as with most Mafia cases, it is difficult to gather sufficient proof to win a conviction. The omertam, or law of silence for fear of retribution, still inhibits witnesses from stepping forward to give testimony.
This happened in the case of Cesare Terranova, a former parliamentary deputy and investigating magistrate who was killed by the Mafia in 1979. His murder case was dismissed recently for lack of evidence. The main defendant was a well-known figure of the new Mafia, Luciano Liggio, who is still being held on other charges.
''In all these trials there is almost no proof,'' said Mrs. Terranova. Her husband was shot to death at 8:30 a.m. in his car in the middle of a busy street. ''There are no witnesses. They say they don't remember, they didn't see. . . . There's fear here. There's great fear in Palermo.''
In a new development, the Roman Catholic Church in Sicily, with the backing of the cardinal of Palermo, Salvatore Pappalardo, has recently thrown its weight into the fight against this very old Sicilian problem. When General Dalla Chiesa was killed, Cardinal Pappalardo made a strong anti-Mafia speech at his funeral, accusing the Rome politicians who attended of not fighting enough against the Mafia.
''The church has to isolate the Mafia and the Mafia mentality,'' said Father Stabile, a Catholic priest from the nearby town of Bagheria who has helped organize a local anti-Mafia campaign in his parish.
Father Stabile's town is in a zone that has come to be known as the ''triangle of death,'' formed by the three towns of Bagheria, Casteldaccia, and Altavilla, that became the scene last summer of a murderous intergang warfare. ''Last August,'' said Father Stabile, ''about 15 people were killed in 15 days. Every day there was a killing. As a church we couldn't rest in silence. The people were silent. The politicians were silent. We felt at that moment we had to speak.''
Father Stabile and other Catholic priests in the area published a manifesto denouncing the killings. They have since organized an anti-Mafia committee in Casteldaccia, composed of clergy as well as members of the political parties. Both Communists, the traditional opponents of the Mafia in Sicily, and Christian Democrats have joined the committee.
These anti-Mafia committees are a new phenomenon in Sicily, where Mafia rule has traditionally been equivalent to law.
Rita Costa, a member of the Sicilian parliament and widow of Prosecutor General Gaetano Costa, killed by the Mafia in 1981, has proposed a measure to introduce anti-Mafia education in Sicily's public schools. ''If we are now to combat the Mafia,'' she said, ''we have to create an alternative culture.'' That , said Mrs. Costa, may take a long time.
Even the new anti-Mafia legislation concerning finances, the main tool investigators have to crack open Mafia cases since few people are willing to give testimony, has run into local opposition.
''Some proprietors are worried that the anti-Mafia legislation will stop the mechanism of the economy in Sicily,'' said Father Stabile.