Italy's centre-right sets out conditions to form coalition Enrico Letta, Italy's centre-left prime minister designate, faces a daunting task in forming a coalition government as he starts negotiations on Thursday with Silvio Berlusconi's centre-right party, which lost no time in setting out tough preconditions. Commentators and market analysts were generally upbeat over the prospects of Italy finally installing a new government within days, following two months of deadlock. "We think this process should be relatively smooth, and could be concluded as soon as the end of next week," Goldman Sachs, an investment bank, commented as financial markets reacted positively to Mr Letta's nomination. But an opening salvo from the rival centre-right camp suggested the process would be far from easy. Renato Brunetta, economist and leader in the lower house of Mr Berlusconi's People of Liberty, laid out a list of demands for their party to enter a coalition led by Mr Letta. They include commitments to carry out the former prime minister's campaign pledge to abolish an unpopular housing tax imposed by Mario Monti's technocrats last year and to reimburse property taxes already paid. "If these conditions are not met, we won't join this government," Mr Brunetta said, going on to list the party's demands for cuts in the cost of labour, a slashing of the public debt and reform of the judiciary. Mr Brunetta also insisted that the cabinet be composed only of politicians, ruling out the inclusion of technocrats. Technocrats are a failure of politics. We want a political government," he said, commenting on reports that the coalition might include outsiders, such as Fabrizio Saccomanni, director-general of the Bank of Italy, as finance minister. Mr Berlusconi was almost written off in late 2011 as his government collapsed under pressure from financial markets, defection of his allies and the weight of his trials on charges of tax fraud and paying for an underage prostitute, which he alleged were political persecution by a biased judiciary. His powerful, populist election campaign, driven by promises of tax cuts and attacks on Germany's "hegemony" in imposing recession-inducing austerity, brought the former prime minister back from the dead to within a whisker of defeating the centre-left Democrats in the February elections. Mr Berlusconi recognises he paid heavily for his party's support of Mr Monti's unpopular technocrats, which he abruptly cut short in December, and knows he has to deliver in a future coalition to keep his supporters on board. Opinion polls that show Mr Berlusconi would have a good chance of winning a snap rerun of elections strengthen his bargaining position. Leonardo Morlino, professor of political science at Luiss University in Rome, said a coalition government was feasible if it based its agenda on the list of institutional and economic reforms laid out last month by a commission of "10 wise men" set up by Giorgio Napolitano, head of state. "However, although there is this great occasion, there is always the division among the different parties and the risk of finding ourselves in another cul-de-sac," he added. Mr Berlusconi and a strong leftwing faction within the Democrats both recognise the danger of entering a joint enterprise that could soon collapse, leaving the anti-establishment Five Star Movement - which won a quarter of votes in February - in a powerful position to pick up the pieces. The populist protest movement led by comic-activist Beppe Grillo is already portraying the proposed coalition as a backroom deal to rescue a discredited political elite. "It is incredible that after 19 years of engagement, those two parties are finally getting married," commented Alessandro Di Battista, an MP for the movement which, as the third largest force in parliament, is presenting itself as the "real" opposition.