Berlusconi averts crisis, but is his magic waning?

Prime Minister Silvio Berlusconi has managed to defuse the latest crisis to hit his 13-month-old government by quickly replacing a controversial interior minister, but he has not emerged unscathed.

Claudio Scajola tendered his resignation under intense pressure to step down after calling a government aide murdered by leftist guerillas "a pain in the ass."

Shrugging off criticisms that his ministers were dropping like flies and calls for him to follow suit, Berlusconi named a new minister on Wednesday, ending the biggest controversy to rock his government.

Analysts said Berlusconi managed to put out the fire for now but that the episode had highlighted divisions in his centre-right coalition and tensions over one of the cornerstones of his electoral campaign: labour reform.

In an editorial headlined "The Latest Acrobatic Act," Milan's Corriere della Sera said it has to be recognised that Berlusconi's resolution of the resignation saga was "politically perfect", but perhaps not enough.

"There is still a crisis of credibility that the prime minister's words have not dissipated," it added.

Berlusconi found himself at the centre of the storm after rejecting Scajola's first offer to step down on Sunday. But after accepting the second resignation letter, he managed to find a replacement within hours and present it all as a matter of political routine before an unruly parliament.

Last weekend, Scajola was quoted by two leading newspapers as saying Marco Biagi, an adviser to the Labour Ministry, "was a pain in the ass who wanted his contract renewed" and questioning the importance of Biagi's work for labour reforms.

Biagi was shot dead in March by Red Brigades leftist guerillas. The Brigades, who terrorised Italy during the late 1970s and 1980s, said they killed him because he was helping draft laws that would make it easier to fire employees.

By moving quickly to find a replacement - Giuseppe Pisanu, another ally from his Forza Italia party - Berlusconi spared himself the embarrassment of having to defend again a friend who was politically finished in the eyes of most Italians. In a stern speech to the lower house, he hailed the slain Biagi as a "hero and martyr for all of us" and called for unity in fighting terrorism. He also went on the offensive, accusing union leaders and the opposition of fuelling a climate of hate.

Berlusconi told reporters on Thursday that he felt his government had emerged stronger from the episode and that it was "moving ahead forcefully" with its programme.

But analysts and opposition lawmakers said the fact that two ministers and three undersecretaries had left the coalition in a year pointed to friction.

La Repubblica said in an editorial that Berlusconi had opted for the correct, if inevitable, solution, but now the time of truth was at hand. "After this event it is clear to all that there is a government crisis."

"This government had planned big things: reforms, tax cuts, big public works... but instead we're seeing the dizzying free-fall of leaders who held important posts," said Severino Lavagnini, a senator of the opposition Margherita party.

Renato Ruggiero, former head of the World Trade Organisation, quit the post of foreign minister in January after a dispute with the government over what he said was its lukewarm commitment to Europe.

Berlusconi has acted as interim foreign minister since then, but Civil Service Minister Franco Frattini said in a newspaper interview published on Thursday that he expected to take over the job by the end of July.

This, too, would be controversial. Opposition politicians recently slammed legislation Frattini wrote on conflict of interest as being tailor-made to allow Berlusconi to retain his business interests. Frattini denied the accusations, saying the law tried only to respect the right to property.