He has police on the street," said his friend, a retired army major, Berislav Stanojlovic, pointing at the ranks of special police blocking the main road The protests would continue, they said. "The minimum is that they should recognise the election results and open the radio and television to all political parties, because we from the opposition have no access," Mr Antonic added.State television news pumps out propaganda so blatant that the 7.30pm evening news is drowned out every night by the noise of people whistling and banging pots and pans. Zajedno also wants reform of Serbia's electoral law, as presidential and parliamentary elections are expected to take place this year.. Besieged by reports that it would not be admitted into Europe's premier economic league, the Italian government insisted yesterday that it was on course to meet the criteria for monetary union in time for the launch date of 1 January 1999, and lashed out at what it called a character assassination being orchestrated by the international media. Not for the first time, unofficial reports and rumours have abounded in the past few days suggesting that the heavyweights of the European Union, and Germany in particular, do not want to expose themselves to the risk of a single currency burdened down by the uncertain economy and unstable political structure of a country like Italy. Such reports, however, risk scuppering Italy's energetic efforts to catch up with its European partners, upsetting the equilibrium so far provided by cautiously optimistic financial markets and threaten the survival of Prime Minister Romano Prodi's government.The final straw for Mr Prodi came yesterday with the publication of a report in the Financial Times suggesting that Italy would be offered a compromise deal whereby it would not join Economic and Monetary Union in 1999 but would get in ahead of the final phase in 2002.

The report immediately battered the lira's value against the German mark.In response, a government source said: "Prime Minister Prodi, faced with a continual but baseless stream of rumours and leaks ... reaffirms Italy's firm intention and solemn undertaking to meet the criteria set by the Maastricht treaty on time."The truth is that Italy is doing far better than anyone expected in its efforts to bring its ragged public finances to order. With a huge austerity budget for 1997 and further cutbacks in the works, it no longer seems inconceivable that Italy's budget deficit to gross domestic product (GDP) ratio could be pushed down to the required 3 per cent by the end of the year.Inflation is at a record low of 2.5 per cent, growth looks buoyant and there is good news on trade figures. Interest rates have been cut twice in four months, providing much-needed oxygen to industry as it struggles with a vastly increased tax bill.Were Italy to be dropped from the front bench, it could have grave political consequences. Mr Prodi's government probably would not survive a rebuff of this kind. A delay would deepen the gulf between the rich north and the under-developed south, risking a split along the lines suggested by the secessionist Northern League.Mr Prodi will be asking some tough questions of Chancellor Helmut Kohl at a bilateral summit in Bonn tomorrow, and will hope at the very least to postpone the crunch moment for another few months..

Speculation intensified yesterday that countries which do not join the first wave of monetary union in 1999 may be offered informal guarantees of membership by 2002. The idea of a "second wave" could appeal to a future Labour government, given recent statements from Robin Cook, Labour's foreign affairs spokesman, suggesting that Labour might wish to join the single currency after 1999, if it proves successful. The fallback date of 2002 is a convenient new deadline, given that euro notes and coins are due to start circulating in that year. Germany, France, Luxembourg, The Netherlands, and possibly Ireland and Belgium are candidates for the "first wave". The "second wave" idea is being canvassed on the Continent as a means of defusing the political ructions which will inevitably erupt, in countries such as Italy and Spain, if they are rejected from the first wave, because they have failed to meet the economic rules. However, formal comment on the idea is hard to come by, as all planners, in Brussels and other capitals, fear that discussion of a "second wave" could undermine confidence in the entire project.It is thought unlikely that either Italy or Spain will qualify for entry in 1999.