Govt has casual approach on terror: BJP

NEW DELHI: Accusing the government of having a casual approach on the issue of terror, the BJP said that it has "failed" to take effective steps to prevent blasts in Hyderabad.

"The government's response is not adequate to the burning issue of terrorism. Government is taking it in a casual and usual manner," BJP leader Venkaiah Naidu told reporters outside Parliament on Friday.

"This is a very serious issue. Series of bomb blasts are happening and especially in Hyderabad and the government is unable to take any effective step. Information in received that National Investigation Agency had mentioned Hyderabad, Bangalore, Maharashtra and other areas where there is possibility of such blasts," he said.

The BJP leader said NIA had given this information two days ago which was confirmed by Home minister Sushilkumar Shinde himself.

"It is a serious issue and the government is not prepared to discuss the issue. We want MPs to express their views and then home minister should give his statement."

Criticising Shinde for going to Hyderabad on Friday, Naidu said, "The home minister should have gone to Hyderabad yesterday itself after the incident and should have come back in the morning today. Government is ignoring Parliament."

The BJP leader charged, "The home minister is changing his stand very often. First he said there were intelligence reports on possible terror attack and later said there were no specific inputs."

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APNewsBreak: Govs to hear Oregon health care plan

SALEM, Ore. (AP) — Oregon Gov. John Kitzhaber will brief other state leaders this weekend on his plan to lower Medicaid costs, touting an overhaul that President Barack Obama highlighted in his State of the Union address for its potential to lower the deficit even as health care expenses climb.

The Oregon Democrat leaves for Washington, D.C., on Friday to pitch his plan that changes the way doctors and hospitals are paid and improves health care coordination for low income residents so that treatable medical problems don't grow in severity or expense.

Kitzhaber says his goal is to win over a handful of other governors from each party.

"I think the politics have been dialed down a couple of notches, and now people are willing to sit down and talk about how we can solve the problem" of rising health care costs, Kitzhaber told The Associated Press in a recent interview.

Kitzhaber introduced the plan in 2011 in the face of a severe state budget deficit, and he's been talking for two years about expanding the initiative beyond his state. Now, it seems he's found people ready to listen.

Hospital executives from Alabama visited Oregon last month to learn about the effort. And the U.S. Department of Health and Human Services announced Thursday that it's giving Oregon a $45 million grant to help spread the changes beyond the Medicaid population and share information with other states, making it one of only six states to earn a State Innovation Model grant.

Kitzhaber will address his counterparts at a meeting of the National Governors Association. His talk isn't scheduled on the official agenda, but a spokeswoman confirmed that Kitzhaber is expected to present.

"The governors love what they call stealing from one another — taking the good ideas and the successes of their colleagues and trying to figure out how to apply that in their home state," said Matt Salo, director of the National Association of Medicaid Directors.

There's been "huge interest" among other states in Oregon's health overhaul, Salo said, not because the concepts are brand new, but because the state managed to avoid pitfalls that often block health system changes.

Kitzhaber persuaded state lawmakers to redesign the system of delivering and paying for health care under Medicaid, creating incentives for providers to coordinate patient care and prevent avoidable emergency room visits. He has long complained that the current financial incentives encourage volume over quality, driving costs up without making people healthier.

Obama, in his State of the Union address this month, suggested that changes such as Oregon's could be part of a long-term strategy to lower the federal debt by reigning in the growing cost of federally funded health care.

"We'll bring down costs by changing the way our government pays for Medicare, because our medical bills shouldn't be based on the number of tests ordered or days spent in the hospital — they should be based on the quality of care that our seniors receive," Obama said.

The Obama administration has invested in the program, putting up $1.9 billion to keep Oregon's Medicaid program afloat over the next five years while providers make the transition to new business models and incorporate new staff and technology.

In exchange, though, the state has agreed to lower per-capita health care cost inflation by 2 percentage points without affecting quality.

The Medicaid system is unique in each state, and Kitzhaber isn't suggesting that other states should adopt Oregon's specific approach, said Mike Bonetto, Kitzhaber's health care policy adviser. Rather, he wants governors to buy into the broad concept that the delivery system and payment models need to change.

That's not a new theory. But Oregon has shown that under the right circumstances massive changes to deeply entrenched business models can gain wide support.

What Oregon can't yet show is proof the idea is working — that it's lowering costs without squeezing on the quality or availability of care. The state is just finishing compiling baseline data that will be used as a basis of comparison.

One factor driving the Obama administration's interest in Oregon's success is the president's health care overhaul. Under the Affordable Care Act, millions more Americans will join the Medicaid rolls after Jan. 1, and the health care system will have to be able to absorb the influx of patients in a logistically and financially sustainable way.

The federal government will pay 100 percent of the costs for those additional patients in the first three years before scaling back to 90 percent in 2020 and beyond.

"There are a lot of governors who are facing the same challenges we're facing in Oregon," Kitzhaber said. "They recognize that the cost of health care is something they're going to have to get their arms around."

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Arias Challenged On Pedophilia Claim

Accused murderer Jodi Arias was challenged today by phone records, text message records, and her own diary entries that appeared to contradict her claim that she caught her ex-boyfriend, Travis Alexander, looking at pictures of naked boys.

Arias had said during her testimony that one afternoon in January 2008, she walked in on Alexander masturbating to pictures of naked boys. She said she fled from the home, threw up, drove around aimlessly, and ignored numerous phone calls from Alexander because she was so upset at what she had seen.

The claim was central to the defense's accusation that Alexander was a "sexual deviant" who grew angry and abusive toward Arias in the months after the incident, culminating in a violent confrontation in June that left Alexander dead.

Arias claimed she killed him in self-defense. She could face the death penalty if convicted of murder.

Catching Up on the Trial? Check Out ABC News' Jodi Arias Trial Coverage

Today, prosecutor Juan Martinez, who has been aggressive in questioning witnesses throughout the trial, volleyed questions at her about the claim of pedophilia, asking her to explain why her and Alexander's cell phone records showed five calls back and forth between the pair throughout the day she allegedly fled in horror. Some of the calls were often initiated Arias, according to phone records.

Jodi Arias Doesn't Remember Stabbing Ex-Boyfriend Watch Video

Jodi Arias Murder Trial: Testimony About Ex's Death Watch Video

Arias on Ex-Boyfriend's Death: 'I Don't Remember' Watch Video

She and Alexander also exchanged text messages throughout the afternoon and evening at a time when Arias claims the pedophilia incident occurred. In those messages they discuss logistics of exchanging one another's cars that night. Alexander sends her text messages about the car from a church social event he attended that night that she never mentioned during her testimony.

Arias stuck by her claim that she saw Alexander masturbating to the pictures, and her voice remained steady under increasingly-loud questioning by Martinez.

But Martinez also sparred with Arias on the stand over minor issues, such as when he asked Arias detailed questions about the timing and order of events from that day and Arias said she could not remember them.

"It seems you have problems with your memory. Is this a longstanding thing? Since you started testifying?" Martinez asked.

"No it goes back farther than that. I don't know even know if I'd call it a problem," Arias said.

"How far back does it go? You don't want to call them problems, are they issues? Can we call them issues? When did you start having them?" he asked in rapid succession. "You say you have memory problems, that it depends on the circumstance. Give me the factors that influence that."

"Usually when men like you or Travis are screaming at me," Arias shot back from the stand. "It affects my brain, it makes my brain scramble."

"You're saying it's Mr. Martinez's fault?" Martinez asked, referring to himself in the third person.

"Objection your honor," Arias' attorney finally shouted. "This is a stunt!"

Timeline of the Jodi Arias Trial

Martinez dwelled at one point about a journal entry where Arias wrote that she missed the Mormon baptism of her friend Lonnie because she was having kinky sex with Alexander. He drew attention to prior testimony that she and Alexander used Tootsie Pops and Pop Rocks candy as sexual props.

"You're trying to get across (in the diary entry) that this involved a sexual liaison with Mr. Alexander right?" he asked. "And you're talking about Tootsie Pops and Pop Rocks?"

"That happened also that night," Arias said.

"You were there, enjoying it, the Tootsie Pops and Pop Rocks?" he asked again, prompting a smirk from Arias.

"I enjoyed his attention," Arias said.

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Mexico security forces abducted dozens in drug war: rights group

IGUALA, Mexico (Reuters) - Dozens of people were abducted and murdered by Mexican security forces over the past six years during a gruesome war with drug cartels, Human Rights Watch said on Wednesday, urging President Enrique Pena Nieto to overhaul the military justice system.

The rights group said that since 2007 it has documented 149 cases of people who were never seen again after falling into the hands of security forces, and that the government failed to properly investigate the "disappearances."

"The result was the most severe crisis of enforced disappearances in Latin America in decades," the U.S.-based group said. (Human Rights Watch report: http://r.reuters.com/fyk26t)

It recommended reforming Mexico's military justice system and creating a national database to link the missing with the thousands of unidentified bodies that piled up during the military-led crackdown on drug cartels.

The report was a grim reminder of the dark side of the war on drug cartels that killed an estimated 70,000 people during former President Felipe Calderon's six-year presidency.

The report also illustrates the obstacles that President Pena Nieto, who took office in December, faces in trying to stem the violence, restore order over areas of the country controlled by the drug cartels and end abuses by security forces.

For nearly three years, 56-year-old shopkeeper Maria Orozco has sought to discover the fate of her son. She says he was abducted along with five colleagues by soldiers from the nightclub where they worked in Iguala, a parched town south of the Mexican capital.

She says a grainy security video, submitted anonymously, shows the moment in 2010 when local soldiers rounded up the men.

"We used to see the military like Superman or Batman or Robin. Super heroes," said Orozco. "Now the spirit of the whole country has turned against them."

Hers was one of the cases illustrated in the Human Rights Watch report.

Pena Nieto has vowed to take a different tack to his predecessor Calderon and focus on reducing violent crime and extortion rather than on going head to head with drug cartels.

The government last month introduced a long-delayed law to trace victims of the drug war and compensate the families. It says it is moving ahead with plans to roll out a genetic database to track victims and help families locate the disappeared.

"There exists, in theory, a database with more than 27,000 people on it," said Lia Limon, deputy secretary of human rights at Mexico's interior ministry. "It's a job that's beginning."

Still, impunity remains rife. The armed forces opened nearly 5,000 investigations into criminal wrongdoing between 2007 and 2012, but only 38 ended in sentencing, according to Human Rights Watch.

In its report it describes the impact of the disappearances on victims' families, a daily reality for Ixchel Mireles, a 50-year-old librarian from the northern city of Torreon, whose husband Hector Tapia was abducted by men in federal police uniforms.

Neither Mireles nor her daughter has heard from Tapia since that night in June 2010.

"I want him to be alive, but the reality just destroys me," said Mireles. "I just want them to give him back, even if he is dead."

Since her husband's disappearance, Mireles has struggled financially, having lost his 40,000 pesos ($3,143) a month salary. She has moved her daughter to a cheaper university and can barely keep up payments on her house.

"I now travel by foot," she said, noting that Mexico's social security system does not recognize the disappeared.

Some family members of the disappeared have asked for soldiers guilty of rights abuses to be judged like civilians, a move Mexico's Supreme Court has approved.

"To us it just seems that the military is untouchable," said Laura Orozco, 36, who says she witnessed her brother's military-led abduction. "They're bulletproof."

($1 = 12.73 pesos)

(Additional reporting by Michael O'Boyle,; Editing by Simon Gardner, Kieran Murray and Lisa Shumaker)

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Taiwan's ex-VP to meet China's Xi Jinping

TAIPEI: Taiwan's former vice president Lien Chan will meet China's Communist Party chief Xi Jinping in Beijing next week in the highest-level cross-straits meeting since Xi took office, it was announced on Thursday.

Lien, leading a delegation of some 30 politicians and business leaders on a four-day trip, will leave on Sunday and meet Xi the following day at the latter's invitation, said Kuo Su-chun, a spokeswoman for Lien.

"The meeting is significant as it will be the highest-level between the two sides since Xi assumed the leadership" of the party, Kuo said.

"They have known each other for a long time and they will discuss any topic of interest."

Xi is also due to take over as president in March in China's highly choreographed, once-in-a-decade leadership change.

Taiwan and China split in 1949 after a civil war but Beijing still claims the island as part of its territory awaiting reunification.

Lien became the first leader of the nationalist Kuomintang (KMT) party to visit China in 56 years when he met President Hu Jintao in 2005 to formally end hostilities with the communists.

Ties with China have improved markedly since the KMT's Ma Ying-jeou became Taiwan's president in 2008 on a Beijing-friendly platform. He was re-elected in 2012 for a final four-year term.

- AFP/al

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Special court issues summons to Vijay Mallya over tax dues

BANGALORE: In fresh trouble for the head of crisis-ridden Kingfisher Airlines, Vijay Mallya, the special court for economic offences here has issued summons to him on an income tax department criminal case for not remitting to government the tax deducted at source from salaries of its employees.

The court's action came after it took cognizance of the offence under sections 276B and 278B of the I-T Act, 1962, for not remitting Rs 74.94 crore deducted as TDS in 2009-10 fiscal and Rs 23.70 crore imposed as interest for not meeting the deadline stipulated for payment.

Section 276B entails rigorous imprisonment for a minimum of three months and a maximum of seven years with fine.

The development spells fresh trouble for Mallya, whose airline is tottering with a net loss of Rs 755.17 crore for the third quarter ended December 31, 2012, a period when it did not operate a single flight.

The I-T officials on Tuesday had filed the criminal complaint against the airline and Mallya for failure to remit TDS for the fiscal 2009-10.

The I-T department had also complained that Kingfisher owed the government Rs 401 crore as TDS amount, deducted from salaries of its employees and from payments made to others in the financial years 2008-2012.

The next hearing will be on April 19. Carrying a debt of nearly Rs 8,000 crore and accumulated loss and liabilities of a similar amount, Kingfisher has been grounded since October 1 last year after its pilots and engineers went on a strike over non-payment of salaries.

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Adults get 11 percent of calories from fast food

ATLANTA (AP) — On an average day, U.S. adults get roughly 11 percent of their calories from fast food, a government study shows.

That's down slightly from the 13 percent reported the last time the government tried to pin down how much of the American diet is coming from fast food. Eating fast food too frequently has been seen as a driver of America's obesity problem.

For the research, about 11,000 adults were asked extensive questions about what they ate and drank over the previous 24 hours to come up with the results.

Among the findings:

— Young adults eat more fast food than their elders; 15 percent of calories for ages 20 to 39 and dropping to 6 percent for those 60 and older.

— Blacks get more of their calories from fast-food, 15 percent compared to 11 percent for whites and Hispanics.

— Young black adults got a whopping 21 percent from the likes of Wendy's, Taco Bell and KFC.

The figures are averages. Included in the calculations are some people who almost never eat fast food, as well as others who eat a lot of it.

The survey covers the years 2007 through 2010 and was released Thursday by the Centers for Disease Control and Prevention. The authors couldn't explain why the proportion of calories from fast food dropped from the 13 percent found in a survey for 2003 through 2006.

One nutrition professor cast doubts on the latest results, saying 11 percent seemed implausibly low. New York University's Marion Nestle said it wouldn't be surprising if some people under-reported their hamburgers, fries and milkshakes since eating too much fast food is increasingly seen as something of a no-no.

"If I were a fast-food company, I'd say 'See, we have nothing to do with obesity! Americans are getting 90 percent of their calories somewhere else!'" she said.

The study didn't include the total number of fast-food calories, just the percentage. Previous government research suggests that the average U.S. adult each day consumes about 270 calories of fast food — the equivalent of a small McDonald's hamburger and a few fries.

The new CDC study found that obese people get about 13 percent of daily calories from fast food, compared with less than 10 percent for skinny and normal-weight people.

There was no difference seen by household income, except for young adults. The poorest — those with an annual household income of less than $30,000 — got 17 percent of their calories from fast food, while the figure was under 14 percent for the most affluent 20- and 30-somethings with a household income of more than $50,000.

That's not surprising since there are disproportionately higher numbers of fast-food restaurants in low-income neighborhoods, Nestle said.

Fast food is accessible and "it's cheap," she said.

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Arias Leaves Stand After Describing Killing, Her Lies

Jodi Arias stepped down from the witness stand today after mounting an emotional effort to save herself from death row, insisting to the Arizona jury that an explosive fight with ex-boyfriend Travis Alexander led to his death, and that her lies about killing him masked deep regret and plans to commit suicide.

Arias, 32, will now face what is expected to be a withering cross-examination beginning Thursday from prosecutor Juan Martinez, who has been aggressive to many witnesses throughout the trial and who is expected to go after Arias' claim that she was forced to kill Alexander or be killed herself.

She is charged with murder for her ex-boyfriend's death and could face the death penalty if convicted.

Catching Up on the Trial? Check Out ABC News' Jodi Arias Trial Coverage

The day's dramatic testimony started with Arias describing the beginning of the fight on June 4, 2008 when she and Alexander were taking nude photos in his shower and she claims she accidentally dropped his new camera, causing Alexander to lose his temper. Enraged, he picked her up and body slammed her onto the tile floor, screaming at her, she told the jury.

Arias said she ran to his closet to get away from him, but could hear Alexander's footsteps coming after her down the hall. She grabbed a gun from his shelf and tried to keep running, but Alexander came after her, she said.

"I pointed it at him with both of my hands. I thought that would stop him, but he just kept running. He got like a linebacker. He got low and grabbed my waist, and as he was lunging at me the gun went off. I didn't mean to shoot. I didn't even think I was holding the trigger," she said.

"But he lunged at me and we fell really hard toward the tile wall, so at this point I didn't even know if he had been shot. I didn't see anything different. We were struggling, wrestling, he's a wrestler.

"So he's grabbing at my clothes and I got up, and he's screaming angry, and after I broke away from him. He said 'f***ing kill you bitch,'" she testified.

Asked by her lawyer whether she was convinced Alexander intended to kill her, Arias answered, "For sure. He'd almost killed me once before and now he's saying he was going to." Arias had earlier testified that Alexander had once choked her.

Timeline of the Jodi Arias Trial

Arias on Ex-Boyfriend's Death: 'I Don't Remember' Watch Video

Jodi Arias Describes Violent Sex Before Shooting Watch Video

Jodi Arias Testifies Ex Assaulted Her, Broke Her Fingers Watch Video

But Arias' story of the death struggle ended there as she told the court that she has no memory of stabbing or slashing Alexander whose body was later found with 27 stab wounds, a slit throat and two bullets in his head. She said she only remembered standing in the bathroom, dropping the knife on the tile floor, realizing the "horror" of what had happened, and screaming.

"I have no memory of stabbing him," she said. "There's a huge gap. I don't know if I blacked out or what, but there's a huge gap. The most clear memory I have after that point is driving in the desert."

Arias said that she decided in the desert not to admit to killing Alexander, a decision that would last for two years as Arias lied to friends, family, investigators and reporters about what really happened in Alexander's bathroom.

During that time she initially claimed she got lost that night while driving to a friend's house and never went to Alexander's home in Mesa,Ariz. She later changed her story and said two masked people, a man and a woman, burst into the home and killed Alexander and threatened to kill her family if she told anyone what happened.

She eventually confessed to killing her ex-boyfriend, but insisted it was self defense.

"The main reason (for lying) is because I was very ashamed of what happened. It's not something I ever imagined doing. It's not the kind of person I was. It was just shameful," she said. "I was also very scared of what might happen. I didn't want my family to know that I had done that, and I just couldn't bring myself to say that I did that."

"From day one there was a part of me that always wanted to (tell the truth) but didn't dare do that. I would rather have gone to my grave than admit I had done something like that," she said.

Arias said that she continued to lie because she figured she would never get caught; she was planning to kill herself before trial.

"I was concerned with how it would affect my family. I wanted to die. I was going to definitely kill myself," she said. "That was my plan. You can purchase different things in jail and I bought a bunch of Advil... and took it all in the next few days so it was in my system. They have razors for shaving, so I got one and took it apart one night with intentions to slit my wrists."

Arias said she balked at slitting her wrists after accidentally cutting herself, but that she still planned to commit suicide sometime in the future. When she told news reporters that "no jury would convict her," she claims she said it believing that she would be dead before they'd have a chance to put her on trial, Arias testified.

Arias said support from the public and her family eventually led her to change her mind.

"My family remained very supportive, and told me 'it doesn't matter what happens, we love you anyway.' I realized even if I told the truth they would still be there and wouldn't walk away," she testified.

"By the time spring, 2010, rolled around, I confessed. I basically told everyone what I could remember of the day and that the intruder story was all BS pretty much."

She said that her testimony today, a third version of events, was the truth.

Arias was arrested a month after Alexander's death, and prosecutors have argued that her behavior during those weeks showed a lack of remorse for the killing and an attempt to get away with murder.

Arias said today that after she killed Alexander and drove away from his Mesa, Ariz., home in a panic, it dawned on her that police would soon be looking for Alexander's killer, and she decided that she would pretend the bloody confrontation had never happened.

"I knew that it was really bad, that my life was probably done now. I wished it was just a nightmare I could wake up from, but I knew I had messed up pretty badly and the inevitable was going to be something I could not really run from," she testified.

"I didn't want anyone to know that that had happened or that I did it, so I started taking steps in the aftermath to cover it up. I did a whole bunch of things to try to make it seem like I was never there," she said.

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Insight: Rome will burn, regardless of Italian election result

ROME (Reuters) - Regardless of who wins next weekend's parliamentary election, Italy's long economic decline is likely to continue because the next government won't be strong enough to pursue the tough reforms needed to make its economy competitive again.

Bankers, diplomats and industrialists in Rome and Milan despair at how Italians are shifting allegiances ahead of the February 24-25 vote to favor anti-establishment upstarts and show disgust with the established parties.

That makes it more likely that no bloc will have the political strength to tackle Italy's deep-rooted economic crisis, which has made it Europe's most sluggish large economy for the past two decades.

Final opinion polls predict that the vote will deliver a working majority in both houses for a centre-left coalition governing in alliance with technocrat former prime minister Mario Monti. Political risk consultancy Eurasia assigns this scenario a 50-60 percent probability.

But Italy's election for both chambers of parliament has the potential to tip the euro zone back into instability if the outcome does not produce that result.

The colorful cast of candidates includes disgraced media tycoon Silvio Berlusconi, one of the world's richest men, the bespectacled academic Monti, anti-establishment comedian Beppe Grillo who campaigns from a camper van, and Nichi Vendola, a former communist poet who is the governor of Puglia.

Investors have so far taken a relaxed view, relying on polls produced until the legal deadline for surveys of Feb 10.

One of the best indicators that they are not worried: Italian benchmark 10-year bond yields, which topped six percent during the country's worst political moments in 2011, are now trading around 4.4 percent, almost a full percentage point lower than those of Spain.

Italian stocks have performed broadly in line with the wider European market since January, despite the election and a wave of scandals which has engulfed several leading Italian groups.

But observers in Italy are increasingly nervous that the rosy election scenario favored by investors may not work out.

A jaded electorate, angry about political corruption, economic mismanagement and a national crisis that has impoverished a once-wealthy member of the G7 club of rich nations, could produce a surprise.

Pier Luigi Bersani, the standard-bearer for the centre-left, is a worthy but lackluster former minister whose party has been linked to a banking scandal in the mediaeval Tuscan town of Siena. Support for his party now seems to be fading.

Opponents have latched on to the fact that the ailing bank, Monte dei Paschi, was run by a foundation dominated by political appointees from the centre-left and accused Bersani's party of presiding over a debacle that will cost taxpayers hundreds of millions of euros.

CAMPER VAN POLITICS

Monti, dubbed "Rigor Montis" by one opponent for his austerity policies which critics say hurt growth, is stuck in fourth place and slipping. Detractors say he comes across poorly on the hustings and has been hurt because he formed an election alliance with two discredited centrist politicians who are emblematic of the traditional politics which Monti disavows.

The big gainer in the final days before the election, according to private surveys quoted by experts, is stand-up comedian Beppe Grillo and his anti-establishment 5-Star Movement. Grillo has been on a "tsunami tour" of Italy in a camper van, filling piazzas with his ringing denunciations of the country's political class. He campaigns mainly on the Internet, where his widely read blog features a list of Italy's parliamentarians convicted of a crime (it features 24 names).

"The big question is: what happens to Grillo?" said one senior banker in Milan, speaking on condition of anonymity. "He won't win but he could stop Bersani and Monti from getting enough seats to form an effective government."

Under the electoral law in force for this poll, which almost all Italians agree is in need of reform, voters cast ballots for a party list. The coalition with the most votes is awarded top-up seats in the lower house to give it a 55 percent majority. But in the Senate, the top-up premium applies by region.

Pollsters say the race is too close to call in a few battleground regions but there is a good chance the centre-left will fall short of a majority in the Senate, which has equal law-making powers to the lower house.

A substantial vote for Grillo's movement - and some experts suggest he could top 20 percent - could mean the new parliament is filled with new, inexperienced, anti-establishment deputies who may refuse to do deals with other politicians and block legislation. Bersani and Monti could find themselves without a workable majority in the Senate even in alliance - a scenario which Eurasia believe has a 20-30 percent probability.

"It's hard to see Grillo's movement as a source of stability," said one diplomat, speaking off the record. "There is no chance they would be part of a coalition."

CONVICTION POLITICIAN

Ironically Grillo himself will not be entering parliament regardless of how well his movement does. The shaggy-haired 63-year-old was convicted of manslaughter after three passengers died when a jeep he was driving crashed in 1981, making him ineligible for election under his own party's rules barring convicted criminals from parliament.

"Grillo's agenda is just silly," said one leading Italian columnist, speaking anonymously because his publication did not allow him to be quoted in other media before the vote.

"It's a fuck off policy. He wants to leave Europe, set up people's tribunals, halve public employees. It's the most visible symptom of Italy's political crisis."

The 5-Star Movement is not the only anti-establishment force threatening to make Italy ungovernable. The federalist Northern League, which favors greater autonomy for northern Italy, is polling around five percent nationally. Its leader Roberto Maroni told Reuters last week he would use his seats in parliament in alliance with the centre-right to block a centre-left coalition and prevent it from governing.

The League is particularly important in the Senate as its home region of Lombardy, where the party polls about 15 percent, returns by far the most senators - 49 out of a chamber of 319.

Should Grillo's movement and the Northern League win enough seats to deprive a centre-left coalition with Monti of an overall majority, the most likely outcome is a "grand coalition" of left and right, experts say.

Such a result would unsettle investors because it would be likely to bring centre-right leader former premier Berlusconi, 76, back into government in a key role and Monti would be unlikely to join it.

Berlusconi's own party has boosted its standing in polls over the past month, helped by the former premier's veteran campaigning skill and his dominance of the country's private TV channels. But nobody apart from his own supporters believes he is likely to win this time.

POPE FACTOR

Pope Benedict's unexpected resignation this month has pushed the parliamentary election off the front pages in Italy, giving Berlusconi less print space and TV air time to press his populist message. The main beneficiary appears to be Grillo, whose strategy of ignoring mainstream media and campaigning on the Internet has been unaffected by the news from the Vatican.

Investors above all want a government which will tackle the reasons for Italy's lackluster performance. Italy has hardly grown since the birth of the euro in 1999 and its economy has slumped faster since the 2007 financial crisis than any other in Europe except Greece. Last year, Italy contracted by 2.2 percent, according to official statistics.

Businessmen complain of three main obstacles: stifling bureaucracy, labor laws which offer workers so much protection that they encourage slack performance, and a dysfunctional court system which makes it hard to enforce contracts and collect debts. All are deep-rooted problems and none is likely to be tackled effectively by a weak and divided government.

"Nobody in Italy is ready to make the reforms our country needs right now," said the chief executive of a major Italian company, speaking off the record.

"I am deeply convinced that without a major change in labor flexibility, we will not be able to increase productivity. My personal experience is that Italian labor is fantastic. But if you take a very good worker and tell him his job is completely safe, you will turn him into a slacker."

Italy's byzantine court system - where cases can languish for years - and its legendary bureaucracy are major obstacles to foreign investment and competitiveness, business people and diplomats say. "Foreign companies are surprised by how hard it is to get things done here which we all thought had been agreed in Brussels 20 years ago," said one senior European diplomat.

Monti's technocratic government won plaudits from business for reforming Italy's pension system but its efforts to reform labor laws did not enjoy similar success. Monti's government lasted 13 months until Berlusconi's bloc triggered its collapse by withdrawing support. Some observers in Italy don't believe that the next parliament's make-up will be nearly as conducive to reform as the outgoing one.

MUDDLE-THROUGH OUTCOME

"I want to be optimistic but my best guess is that they will keep to this muddle-through scenario in the next parliament with lackluster results for the economy," said a second senior diplomat. "This country needs a new generation of political leaders."

Key among the concerns of diplomats and business people is the disparate nature of the centre-left coalition leading in polls.

Bersani's election alliance is made up of four main parties, stretching from the former communist Vendola through the Christian left to socialists and centrists. If it is unable to govern alone, as most polls predict, it will need the support of Monti's bloc - itself made up of three parties.

Bankers fear that a government made up of seven different groups of widely varying political hues is highly unlikely to agree on the tough, radical reform measures the country needs.

"If we have a government made up of Bersani, Monti and Vendola, they will argue all the time," said the chief executive. "Bersani and Vendola's capacity for reform is almost zero." Comparing the present Italian centre-left candidate to the former German chancellor whose successful labor reforms belied his socialist roots, he added: "Bersani is no Schroeder".

Bersani's economic spokesman Stefano Fassina insists that the centre-left fully understands the urgency of Italy's economic plight and is committed to deliver on measures to stop the rot. But he puts the emphasis on making the public sector more efficient and persuading Berlin to tone down budget austerity at a European level rather than pursuing labor reform in Italy. Fassina insists that public commitments by Bersani and Vendola on an agreed program will minimize disagreements but he does admit to concern about how a centre-left administration could work with Grillo's unpredictable forces.

"It's impossible to have any discussions with Grillo as a party," he said. "We hope that in parliament some of his MPs will be pragmatic enough to agree on reasonable measures."

With so much uncertainty about the election and the chances fading of it returning a strong, stable reformist government, it is hard to avoid the conclusion that Italy's slow, steady economic decline will continue regardless of the result.

"We've seen a steady economic decline in Italy over the past 20 years and it's very hard to see any outcome from this election which will reverse that. The reforms which would really get the country going again are out of reach," concluded the European diplomat.

(Editing by Peter Millership and Giles Elgood)

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Pope advised to limit air travel: report

VATICAN CITY: Pope Benedict XVI is nearly blind in one eye and was advised by his doctor to limit air travel because of his high blood pressure, the website Vatican Insider reported on Wednesday.

The report also said the 85-year-old pontiff often has problems sleeping and has fallen out of bed several times in recent years on foreign trips, making him tired in public appearances.

The report was based on indiscretions from papal aides that Vatican affairs specialist Marco Tosatti said he had promised to keep secret until the end of the pontificate on February 28.

"The picture is of a progressive deterioration of his health and his energy -- a context that fully justifies the difficult decision that the pope has taken," Tosatti wrote after the pope said he would step down due to old age.

The report cited the pope's doctor Patrizio Polisca saying two years ago that Benedict's blood pressure was having "major jumps" and insisting that he spend "as little time as possible in a plane because of the dangers".

Tosatti added that Benedict had been expressly advised not to make the transatlantic flight to Rio de Janeiro for World Youth Day later this year.

In his report, Tosatti also said the pope could "almost no longer see" out of his left eye and therefore had to be helped up and down steps.

The report said Benedict even began using a walking stick to get around his own residence last year because his left hip and knee were hurting.

The Vatican last week revealed the pope had hit his head and bled during a trip to Mexico last year and underwent surgery three months ago to replace the batteries in a pacemaker he was fitted with while he was still a cardinal.

- AFP/al

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