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Italy Forms New Government After 2-month Stalemate

In the role, Saccomanni will have to balance European Union insistence on rigorous austerity to heal Italy's finances with politicians' sensitivities to voters. The public's patience has been tried by spending cuts and higher taxes without seeing the start of any economic revival.

Only a few weeks earlier, the head of the Democrats, Pier Luigi Bersani, resigned from the party post in humiliation and he refused Berlusconi's offer for a "grand coalition" and futilely tried to form a government without the center-right. Letta was a Bersani loyalist.

Bersani hailed the coalition formula as a "necessary compromise" that gives the country "freshness and solidarity."

The No. 3 bloc in Parliament, the anti-establishment 5 Star Movement, is led by comic Beppe Grillo, who ruled out any alliance with the largely sullied political class that has ruled Italy for decades.

President Giorgio Napolitano, who tasked Letta with creating a government out of bitter rivals, called upon the coalition partners to work "in a spirit of absolute, indispensable cohesion" as they work for sorely needed political and economic reforms.

The 87-year-old head of state sounded almost breathless as he expressed confidence the rivals could work together "without conflict or prejudices to find the right solutions" to the country's pressing economic and political problems.

Napolitano didn't name the challenges, but they include fighting unemployment, especially for young people, and corruption sullying much of the political class.

Napolitano said: "It was and is the only possible government," and one "whose formation couldn't be delayed further, in the interest of our country and of Europe."

He reluctantly agreed to be re-elected by Parliament earlier this month for another seven-year term because of the political instability.

Italy's economy is No. 3 among eurozone members, and financial markets have been anxiously watching to see if an effective government could be formed to carry on with outgoing Premier Mario Monti's efforts to keep the country from sliding into the eurozone's sovereign debt crisis.

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