Italian Premier Seeks New Powers : Economy: Amato moves to confront a crisis that threatens national prosperity and Rome’s stature in Europe.

The designer-dressed Italian economy that cavorted through the ‘80s as a high-flying European star is suddenly threadbare.

Prime Minister Giuliano Amato asked Parliament on Thursday for extraordinary powers to confront an economic crisis that threatens national prosperity and Italy’s stature among its European partners.

His plan would authorize the government to enact emergency economic measures for three years without prior parliamentary consent, bypassing a legislature splintered among 16 me-first parties.

“Full powers would be unconstitutional,” he said, “(but) this proposal is only trying to stop the slow and dangerous erosion of democratic power.”

Amato’s appeal is key to a series of proposals designed to defend the lira while attacking ominous government debt and deficit and encouraging investment.

After a four-hour Cabinet meeting Wednesday, the two-month-old Amato government also announced privatization of two large government-controlled firms--a bank and a mechanical engineering company, both money makers.

In addition, to reduce government expenditure, Amato is asking for cuts in high-level pensions. To increase revenues, he promises a crackdown on tax evaders and the sale of real estate owned by the state.

His intention is to restore growth and credibility to an economy that has lost its way after being hailed only a few years ago as the world’s fifth-largest, surpassing Britain’s by some accounts.

Parliament, where Amato’s four-party coalition has a narrow majority in both houses, is being asked, as emergency measures, to let the government reduce spending, increase taxes, limit its recourse to credit and selectively accelerate investment.

In proposals modeled on a 1967 West German law, emergency powers would be invoked if the Bank of Italy, as an impartial technical judge, decides that a state of economic emergency exists. If it did, the government could rule by decree on economic matters, bypassing always lengthy parliamentary deliberation.

The current emergency is a function of a weak Italian lira and the government’s large borrowing needs to meet its debts and a state deficit that is more than 10% of gross national product.

Amato drew mixed political echoes Thursday: support among centrist parties but fire from the left and regional parties. “A whiff of fascism,” snorted one regionalist.

In the marketplace, Amato’s initiative did not immediately prosper.

Despite the promised privatizations, the chary Milan stock market did not rebound significantly Thursday from some of its lowest levels since 1985.

And, despite newly raised interest rates and a vow not to devalue, the lira came under renewed fierce pressure from the German mark. The lagging lira traded at the low allowed by the European Monetary System, which regulates currencies of European Community countries within certain narrow boundaries.

For the 58 million Italians, Amato’s promise to belatedly balance the national books can only mean the end to a heady period of conspicuous consumption.

Amid vigorous economic growth in the 1980s, Italians came to enjoy some of the highest living standards--and prices--in the world. A one-bedroom apartment in central Rome rents for $2,500 these days. Italy’s 18 first-division soccer teams have paid $480 million to import foreign players.

During the fling, the Italian government underwrote a huge bureaucracy, lavish social programs and some of Europe’s worst public services with debt--more than $100 billion--and a central government budget persistently and wildly in deficit.

With the lira crisis has come a reluctant popular recognition that in Italy, which is far behind most of its partners in preparing economically for the new Europe, the party is over.

Amato, a low-key former law professor, makes no bones about it. Embracing austerity as his government’s call sign, he raised interest rates and announced cuts in government spending in July, not long after taking office as compromise head of a coalition that took six weeks to form.

“We are near the brink,” Amato, a Socialist, warned last week.