October 14, 1998
Web posted at: 7:57 p.m. EDT (2357 GMT)

ROME (CNN) -- Saying Italy has a "grave need" to get its political house in order as European monetary union looms, caretaker Prime Minister Romano Prodi made an open appeal to a key centrist party in an effort to find the parliamentary votes he needs to form a new government.

However, a spokesman for the centrist party, the UDR, expressed skepticism that an agreement would be reached with Prodi.

Prodi's 2 1/2-year-old center-left coalition government collapsed last Friday -- by a one-vote margin -- after the Communist Refoundation party pulled out in a dispute over a national budget that some hard-line communists though was too austere.

On Tuesday, Prodi was asked by President Oscar Luigi Scalfaro to try to form a new government, which could be done either by gaining new support from centrist parties or bringing enough communists back on board to reestablish a majority in the lower house of parliament.

The political crisis comes as Italy is under pressure to pass a cost-cutting budget that will allow the country to meet requirements for entry into the European common currency, the euro, which will be launched in 1999.

"Given the grave need of the country in regard to approval of the budget and a strong entry into monetary union, it has become necessary to turn to an appeal ... to build a majority capable of governing and approving the budget," said a statement from Prodi's office.

The open appeal was issued shortly after Prodi met privately with Francesco Cossiga, the head of the UDR. One of the UDR's conditions for joining the government was that Prodi publicly ask for its support.

However, a UDR party spokesman told Reuters that "the UDR judges that Romano Prodi's attempt to form a government has reached a negative conclusion."

Prodi has been adamant that he won't enter into any under- the-table deals with other political parties to form a new government. Italian TV has repeatedly aired a clip of him pounding his fist in the air and shouting, "No! No!" at the very thought.

But without the UDR's 29 seats or support from Communist Refoundation, political observers say it is difficult to see how Prodi can garner enough votes to form a government. A group of moderate communists, who broke away from Refoundation after the government fell, may back Prodi, but there are not enough of them for a majority.

Senior figures in Prodi's center-left Olive Tree coalition have urged the caretaker prime minister to press ahead with trying to form a government. The leader of the biggest party within Olive Tree, Massimo D'Alema, offered the possibility of a complete Cabinet reshuffle to break the political deadlock.

Correspondent Gayle Young and Reuters contributed to this report.