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On his last day in office, President Lula da Silva has refused to extradite to Italy Cesare Battisti, 56, convicted in absentia of murdering four people there between 1978 and 1979.
Battisti has proclaimed his innocence, that he is the victim of political persecution in Italy and will be killed if extradited.
Italy recalled its ambassador and its the defense minister said Lula da Silva showed a "lack of courage."
PM Silvio Berlusconi said he would "fight on until Battisti is handed over to Italian justice."
Italy also recalled its ambassador in 2009 when Lula declared Battisti a refugee but Brasil's supreme court reversed the declaration.
