PALERMO, Italy (Reuters) - Shortly before 8 a.m. on a sunny spring morning, Mafia boss Giuseppe Dainotti was cycling down a quiet street when two men on a motorbike drew alongside and shot him three times, killing him on the spot.

Mafia boss Giuseppe Dainotti's body lies on ground after he was shot to death in Palermo, Italy May 22, 2017. Picture taken May 22, 2017. REUTERS/Guglielmo Mangiapane

It was a classic mob hit in the heart of the Sicilian capital. People claimed to have seen nothing and only one person admitted to even hearing the gunfire. A month on, no one has been arrested.

Released from prison in 2014, Dainotti, 67, had served more than two decades in jail for murder. The motive for his own murder are not clear but police say the first high-profile Mafia hit in Palermo since 2010 may signal renewed internal strife.

“The Mafia today is in search of a new leadership at a time when a lot of the old bosses are coming out of prison,” said Palermo police chief, Renato Cortese.

“The danger is that some bigwig will be released and try to put the Mafia back together again,” he told Reuters.

Once all-powerful on Sicily, the world’s most famous crime gang, known as Cosa Nostra, “Our Thing”, has been squeezed over the past two decades, with many bosses put behind bars, many of its businesses sequestered and many locals ready to defy it.

Despite these setbacks, no one believes it is dying. Indeed, after years of decline, with the Calabrian ‘Ndrangheta overtaking it as Italy’s most powerful mobsters, prosecutors believe it is trying to rebuild, starting with its drug trade.

“The mafia organization is once again looking to develop and maintain a total monopoly on the extremely profitable narcotics market,” Matteo Frasca, the head of Palermo’s Appeals Court, said in a speech in January.

Italian prosecutors say the ‘Ndrangheta has a stranglehold on cocaine trade, but Cosa Nostra is a major player in the Italian hashish market, often importing the drug from northern Africa and selling it throughout Europe.

In March, police found 400 kg (880 lb) of hashish, worth an estimated 3 million euros ($3.4 million), floating just off the Sicilian coast after a drop-off went awry. In May, police seized around 300 kg of hashish in a single raid in Palermo.

“For a while, the Mafia depended on public work scams and extortion rackets for much of their money, but with the economy in such a dire straits here, they are returning to their old drug habits,” said a senior anti-Mafia magistrate, who declined to be named because he was not authorized to speak publicly.

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SHOPKEEPERS’ REVOLT

Sicily’s economic output fell more than 13 percent between 2008 and 2015 and is only slowly recovering, while the jobless rate is 22 percent, twice the national average.

The deep recession has made it much more difficult for hard-up businesses to pay protection money, or “pizzo” in Italian, to the Mafia and more than 1,000 firms have revolted against paying that in Palermo alone in little more than a decade.

In May, the trial started of nine men accused of extorting cash from a dozen stores in the city’s central Via Maqueda, which were all run by foreigners, mainly Bangladeshis.

“It is an extraordinary affair. For the first time in Palermo, a group of foreign storekeepers rebelled. They rebelled together. It was a collective action,” said Daniele Marannano, coordinator of Addiopizzo, “Goodbye pizzo”.

Addiopizzo is a grassroots civic movement that encourages companies to fight back against Cosa Nostra.

“Lots of businesses still pay the pizzo, but they now want something back from the Mafia for their money - help fixing prices in their neighborhood, help keeping difficult employees in check, help collecting unpaid bills,” said Marannano.

A local businessman, who declined to be named because of the sensitivities involved, said one of the consequences of the Mafia’s decline was a rise in petty crime.

He complained that fruit groves operated by his family food company were regularly raided at night by small-time thieves. “That never used to happen in the past. A fly couldn’t land on a fruit tree without permission first from the Mafia.”

POWER STRUGGLE

The state’s fight against the Mafia only got serious in 1992 after the group murdered two of Italy’s top magistrates, Giovanni Falcone and Paolo Borsellino, triggering national outrage and finally forcing complacent politicians to act.

Successive governments introduced waves of anti-Mafia laws, allowing the state to seize mob assets, keep imprisoned mafiosi incommunicado and far from Sicily, and develop protection programs for informers.

As a result, hundreds of mafiosi have been arrested over the past 25 years, including Salvatore “Toto” Riina, the Boss of Bosses, who ordered the murders of Falcone and Borsellino. He is 86 and believed to be terminally ill and likely to die in jail.

However, many other less prominent mobsters who were caught up in the big anti-Mafia trials of the last two decades have either been freed, like Dainotti, or else are coming up for release, like Riina’s nephew Giovanni Grizzaffi.

“The last Boss of Bosses was Riina. He was never formally replaced and people felt kept in check by him, even when he was in jail. When he dies, you might see a power struggle,” said police chief Cortese, who has a photograph of Falcone and Borsellino hanging in his office.

Dainotti was shot dead on the eve of the 25th anniversary of Falcone’s killing, leaving police and politicians wondering whether the date had been specially picked to signal that the Mafia was back in action.

Rosario Crocetta, the governor of Sicily and anti-Mafia crusader, has been the target of at least three mob plots to kill him, most recently in 2010. He says the group is much reduced, but ever evolving.

“They are chameleons,” he said, two bodyguards standing alongside his table at an outdoors cafe.

“You are never going to win total victory over the Mafia, just as you can never totally defeat evil.”