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Romano Prodi, Italy’s centre-left prime minister, was accused of incompetence and meddling in the affairs of a private company on Thursday as a row with Telecom Italia, the telecommunications giant, threatened the credibility of his economic policy.

“Prodi is either naïve or an interfering busybody,” said Renato Brunetta, a former economic adviser to Silvio Berlusconi, Mr Prodi’s predecessor as premier.

Mr Prodi’s office astounded Italian businessmen on Wednesday by distributing a statement that gave a detailed account of meetings between the prime minister and Marco Tronchetti Provera, Telecom Italia’s chairman.

Parts of the statement disclosed market-sensitive information not only about Telecom Italia, but about foreign companies with which it had contacts, such as News Corporation, Time Warner and General Electric.

The row centres on a restructuring plan that Mr Tronchetti Provera wishes to introduce at Telecom Italia, a company privatised in the 1990s. Many ministers in Mr Prodi’s government dislike the plan, fearing it may lead to a loss of Italian control over telecommunication assets.

The increasingly ugly fight has opened to outside scrutiny the behaviour of Italian politicians and business people at a time when Italy can ill afford to deter foreign investors.

Businessmen said it was strange for the prime minister’s office to reveal the details of delicate negotiations between Telecom Italia and others. Mr Prodi’s office disclosed that Telecom Italia had placed a valuation on some of its Brazilian interests of €7bn-€9bn.

Umberto Mosetti, a professor at the University of Siena who advises minority shareholders in public companies, said Mr Prodi’s disclosures were understandable given what he believes is a lack of openness at Telecom Italia. “Certainly this behaviour does not help Italy, but it is about the bad image of the company as well as the government.”

Mr Prodi’s government, which took office in May, won early praise with a draft 2007 budget that aims to slash Italy’s high deficit, and with unexpectedly bold measures to liberalise parts of Italy’s notoriously protected professions and service sector.

But the centre-right opposition pounced on Mr Prodi’s actions in the Telecom Italia affair to argue that he had shown his true colours as a man ignorant of the private business world and hostage to his coalition’s radical left wing.

“It really seems as if Romano Prodi isn’t aware that Telecom Italia is a private company quoted on the stock market,” said Jole Santelli, a member of Mr Berlusconi’s Forza Italia party.

Leftwing members of Mr Prodi’s coalition have seized on the affair to argue that the government should renationalise the telecommunications network owned by Telecom Italia.

Some experts noted that Italy had a well-deserved reputation for the leaking of sensitive political and business information.

Giacomo Vaciago, a professor at Milan’s Sacred Heart Catholic University who has known Mr Prodi for some time, said: “Foreigners are advised that in Italy we have no secrets. We don’t have skeletons in the closet, all our skeletons can be seen out in the open.”

But the affair has erupted only weeks after Antonio Di Pietro, infrastructure minister, launched a campaign to stop the merger of Autostrade, the privatised toll road company, with Abertis of Spain. He says the new company’s shareholder structure would violate the terms of Autostrade’s privatisation.

The companies dispute his arguments and have approached the European Commission. But even some government advisers say Rome should have behaved differently.

Mr Di Pietro acted with finality only in August, after several months of debate. The government, the advisers say, should have outlawed the merger as soon as it was announced in April if it believed it was illegal.

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