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Italy Tries Again To Get Rivals To Form Government

Berlusconi's No. 2 Angelino Alfano said some progress was made toward an agreement on joining Letta's Democratic Party in a coalition.

But Alfano stressed that whether the coalition is born depends entirely on whether Letta will embrace Berlusconi's economic recipe.

"There are still some kinks to smooth out," Alfano told reporters after huddling with Letta. "The path has been laid out, and that involves putting the economic crisis at the center" of talks. "All revolves around that," Alfano said.

He said more "contacts" between the rival blocs were planned.

Berlusconi told reporters in Texas that the next government's success depends on whether it can carry out a "whole package" of measures to spark economic revival.

"I don't even thing of the hypothesis of failure" by Letta because the economy is "in terrible condition," quoted Berlusconi as saying.

Berlusconi is adamant about abolishing a property tax some consider crucial to Italy's surviving the eurozone debt crisis. In his electoral comeback bid, Berlusconi made eliminating the tax and refunding to citizens the amount they paid last year his main campaign pledge.

The tax was instituted by caretaker Premier Mario Monti, who made the measure's revenue a key way to shore up Italy's finances and keep the country from succumbing to a Greece-style sovereign debt crisis.

Monti, an internationally respected economist, took Berlusconi's place as premier as the financial picture deteriorated, and his small but influential centrist party will be needed by Letta for a coalition.

In an apparently hasty bid to placate Berlusconi, a senator in Monti's party indicated that the property tax measure could be tweaked.

"It's useless to make an ideological clash" over the tax, Senator Linda Lanzillotta said in a statement.

Alfano said Berlusconi also insisted on eliminating payroll taxes for companies which hire young workers to reduce soaring youth unemployment. Monti had focused heavily on increasing tax revenues.

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