By Roberto Landucci

ROME (Reuters) - Franco Picini, a schoolteacher in Italy's capital city, says he has voted for the left all his life, but in this month's European parliament elections, he will back the 5-Star Movement of comedian Beppe Grillo.

"I know his political platform isn't very clear, but enough with Italy's old political guard! They all have to go," says the slim 58-year-old, who teaches teenagers with special needs. "Grillo is the only alternative ... if we want to start over."

The 5-Star Movement swept into Italy's national parliament for the first time last year, riding a wave of discontent with the country's politicians and their mismanagement of the euro zone's third largest economy.

But over the past year, 5-Star has been rocked by internal strife and has little to show in the way of new legislation.

Even so, with Italy still scarred by a three-year economic downturn, the 65-year-old Grillo's grassroots populism remains a potent electoral weapon.

Polls put Grillo's support at about 27 percent for the European elections on May 25, up from the 25.6 percent he took in last year's national elections. That's behind the Democratic Party's 33-34 percent, but some say polls underestimate 5-Star as pollsters typically conduct telephone surveys on land lines, while younger voters, the core of Grillo's support, tend to use mobiles.

"Since the crisis isn't going to be resolved over the next few weeks, the political space for Grillo is still vast," says Elisabetta Gualmini, political scientist for the Istituto Cattaneo research group and author of a book on the 5-Star Movement.

Italy, like other southern European states, is showing tepid signs of economic recovery, and investors are returning to a debt market they had shunned en masse, but business is still suffering, and unemployment high, especially among the young. Even before the crisis, Italy's real per capita gross domestic product had not improved since 1997, two years before the introduction of the euro, according to Eurostat.

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Grillo's critics say the party has wasted an opportunity over this past year to put their popular mandate to good use, maintaining a stance of opposition in parliament, and refusing to join with other parties to pass legislation. But it is seen as a badge of honor by supporters disillusioned with decades of political compromise that has kept coalitions together at the expense of much-needed reform.

And Grillo is having a broader influence on Italy's political discourse. The Democratic Party's new prime minister Matteo Renzi, at 39 Italy's youngest ever, peppers his speeches with slogans from Grillo's hymnsheet, and last month announced he was selling dozens of official government cars on eBay as a way to reduce the fringe benefits of Italy's politicians.

"Renzi and Grillo are very similar. Renzi is the only politician who could eat into the 5-Star Movement's popularity, because he uses the same populist communication strategies that Grillo uses; he speaks directly to homemakers, factory workers," says Gualmini.

ACCOUNTABILITY

In last year's elections, Italians lapped up Grillo's rhetoric that it was time to make government more accountable, especially after a year of austerity measures at the hands of the technocrat government of Mario Monti, who was appointed, not elected, to bring Italy back from the brink of default.

"Neither the right nor the left has done anything to make our life better, or to try something new," says Massimo Ornaghi, a 42-year-old information technology engineer who voted for Grillo in last year's national elections. Ornaghi says that if 5-Star hadn't run, he wouldn't have voted at all.

The result gave 5-Star a formidable block of 163 lawmakers between the lower house Chamber of Deputies and upper house Senate.

"The attention we were getting, particularly abroad, was huge," recalls Vito Crimi, speaker of the party in the Senate.

"It was enough to give us all big heads, and some did get cocky."

From the start, Grillo, who founded and runs 5-Star but is not in parliament, said his party "was neither right nor left, but behind the scenes to check on those who govern".

Sometimes they have been very much center-stage, including a heated attempt to filibuster a property tax bill that led to scuffles in parliament. They failed on that occasion, but on others have exerted influence on government policy. On party financing, long a controversial issue in Italy, they helped push the former government of Enrico Letta to substitute state financing with voluntary contributions by 2017. 5-Star also say they influenced Renzi's plans to reduce the power of various levels of local government in Italy.

"(Grillo) has managed to strip certain controversial issues that used to previously belong either to the right or to the left of the political spectrum," says Roberto Weber, from polling organization Istituto Ixe'.

Perhaps 5-Star's most effective move, in the eyes of its supporters, is to have agreed to halve their salaries to about 4,000 euros a month and use the savings to support small and medium-sized enterprises.

"The other lawmakers drone on about spending cuts, but when we asked them to follow our example and cut their salaries, there was no response," said Nicola Biondo, head of communications for the party in the lower house.

Though in terms of legislation the party has little to its credit, it did secure a popular amendment to the budget that allows private businesses to withhold tax for unpaid bills owed by the state.

Its popularity has survived what often proves fatal to mainstream parties - a series of bitter internal feuds and high-profile defections and expulsions. As many as 14 of its 54 senators and four of its 109 deputies are no longer with the party.

"The idea that everyone counts in the same way in 5-Star is pure hypocrisy," says Luis Orellana, one of the senators who was expelled in February.

SHIFT TO THE RIGHT?

Hurt by the defections and to counter the freshness of Renzi, who had not set foot in parliament until he became premier, 5-Star has been tweaking its policy platform. Grillo, in his blog, has recently tried to attract center-right voters, in particular small businesses and entrepreneurs, traditionally on the right of the political spectrum, whose biggest complaint is Italy's high taxes.

"The party has gradually been moving towards the right," says Mario Catania, a member of the centrist Civic Choice party and former minister of agriculture in Monti's technocrat government.

That's partly a strategic move, analysts say, as Grillo is trying to take disillusioned voters from Silvio Berlusconi's Forza Italia party, which has also suffered internal divisions.

On the blog, which is also an active debate forum, Grillo in April suggested abolishing Equitalia, a private tax collection agency, which he dubbed "the oppressor of small and very small companies, while closing an eye to rich people".

A major plank of Grillo's strategy ahead of European elections is to fuel euroskepticism and seek a popular mandate to abandon the euro, unless there are changes to the financial and budgetary constraints the currency group has signed up to.

"We need to hold a referendum, and our vote will be 'no' if the conditions of the Stability Pact and the Fiscal Compact remain," says Crimi, the party's Senate speaker.

He says 5-Star's biggest achievement is to have restored credibility to Italian politics. "Thanks to us, many people have fallen in love with politics again, and we have opened a window into how our institutions are run."

"This is a model of transparency that we now want to export to Europe," he adds.

Millionaire Grillo has said that if 5-Star doesn't poll first in Italy, he will step aside.

Many don't take him at his word, as they believe the party would fall apart without him.

"He's saying so to shake things up," says Nicola Biondo, the party's communication chief in the lower house. "He wants us to aim high."

(Editing by Alessandra Galloni and Will Waterman)