Berlusconi Reality: Talks For New Italian Government Falter

SILVIO BERLUSCONI likes to dream big. The Italian businessman has already built an empire that includes TV networks, publishers, department stores, financial companies.

And this year he decided to build a political party from scratch and ride triumphantly into the prime minister's office.

He created a conservative political party called Forza Italia in a few months, and it emerged from Italy's March 27-28 parliamentary elections as the biggest vote-getter.

He made an electoral accord with the leading party in Italy's north, the Northern League, and another accord with the leading party in Italy's south, the National Alliance, and together they won an absolute majority of seats in the Chamber of Deputies and a numerical majority of seats in the Senate.

It seemed as though Mr. Berlusconi had a magic touch. All that was left - and he confidently assured the world that this was practically a done deal - was to agree upon a government program with his allies, prepare a list of government ministers, and wait for President Oscar Luigi Scalfaro to name him prime-minister designate.

This is where dream met political reality. After a week of failed negotiations between his partners, including open opposition from Sen. Umberto Bossi, the outspoken leader of the Northern League, Berlusconi threw in the towel.

Berlusconi said he had decided to stop negotiating with his right-wing allies, and that he would wait for President Scalfaro to name a prime-minister designate who would form a new government. Should Berlusconi be that person, he said, he would present a precise government program to the Parliament for its approval. But without Northern League support, there is now doubt that he would win a majority of votes from Parliament.

And amid the breakdown in the talks, Berlusconi himself spoke for the first time of the possibility of returning to the polls if no one succeeds in forming a new government.

Gianfranco Fini, the leader of the neo-Fascist National Alliance, spoke in similar tones. ``Bossi can't be trusted. Either a government is born or it's better to go back to the polls.''

The financial markets reacted quickly, deflating the initial euphoria of an apparent right-wing victory: The lira lost more than 20 points against the dollar.

``[Mr.] Bossi and Berlusconi seem to be like cats and dogs,'' says Fabiana Di Paola, an Italian Popular Party politician elected to her neighborhood city council in Rome. ``It seems stupid not to form a government.... It's really a mess.''

Bossi has taken a hard line, calling for a constituent Parliament that would draft a new Constitution creating a federalist state of three republics (north, center, and south). He has rejected the candidacy of Berlusconi for prime minister, nicknaming him Berluskaiser. And he caustically refers to the National Alliance as ``the Fascists.''

Mr. Fini, meanwhile, is firmly opposed to Bossi's federalist vision, arguing it would lead to northern separatism and insisting Italy must be united.

Carmine Mancuso, the only senator elected in the Progressive alliance for the small Rete party, says he believes the current impasse was predictable, because of Bossi's and Fini's different views on central government.

``I suppose in the end they'll make a government, though each one at the moment pretends it can't be done,'' says Senator Mancuso. ``This talk about new elections is only to blackmail the other forces.''