ANTRODOCO, Italy (Reuters) - Like countless other small towns across Italy suffering from the economic downturn, Antrodoco has long prayed for an investor with deep pockets to help revive its fortunes.
For a town in the shadow of a mountain where a pine grove spells out "DUX" -- for 20th century fascist dictator Benito Mussolini -- hope has come from an unexpected source: Libya.
Libyan leader Muammar Gaddafi has demonstrated a growing interested in Italy for some time and will be visiting Rome for talks with Prime Minister Silvio Berlusconi on Monday.
Set in green hills on a road between Rome and the Adriatic, the unremarkable town of 3,000 caught Gaddafi's eye when he was on his way to a Group of Eight summit in L'Aquila last year.
Antrodroco's Mayor Maurizio Faina said a Libyan delegation returned later to say Gaddafi, known for his apparently spontaneous decisions, was bowled over by local hospitality and wanted to do something for the town.
The delegation said Libya wanted to invest as much as 15 million euros ($19 million) to build a luxury hotel and a bottled water plant in the town, said a delighted Faina.
This was music to the ears of the mayor, whose town has struggled with rising unemployment, lack of investment and an exodus of its young people.
"The economic crisis is massive at the moment so this is just huge for us. It could really put us on the tourist map," he said, showing photos of Gaddafi in dark glasses surrounded by smiling residents when he stopped here last year. "We were so surprised. Investors are so hard to find these days."
At the Gelateria Bruno ice cream parlour in the main square, Rina Boni has prepared an iced concoction with chunky dates to honor Gaddafi. She calls the new flavor "Taste of the East."
"I thought we should make a gelato that pays homage to the leader," she said. "How I wish we could present him with this ice cream to taste! But protocol will not allow him to taste anything not approved (by his entourage)."
The palpable excitement in Antrodoco at a rosy future backed by Libyan money illustrates the growing influence the former pariah state wields in its former colonial ruler Italy, where it has snapped up stakes in major companies such as UniCredit bank.
While the United States and Britain grapple with difficult ties with Libya, strained further by outrage over the release from a Scottish prison last year of a terminally ill Libyan convicted of the 1988 Lockerbie bombing, Italy has embraced Gaddafi.
Residents may be wondering what exactly the Libyan leader saw in their town -- "Perhaps he was taken in by the fresh air and greenery here," muses Deputy Mayor Armando Nicoletti -- but some Libya watchers are not surprised.
"The leader suddenly taking a fancy to a village and then deciding to turn its fortunes around -- a lot of planning in Libya was done like that," said Dirk Vandewalle, a professor at Dartmouth College in the United States and a Libya expert.
Still, there may be nothing arbitrary about the political dividends the wily Libyan leader stands to gain.
"The irony of a small village in what used to be a colonial power being helped out by Libya, it makes for a lot of political capital at home for Gaddafi," said Vandewalle.
"It's something quite symbolic. It's something Gaddafi can say: 'After all the Italians have done to us, now they're dependent on us'. Nothing escapes Gaddafi from the point of view of portraying himself in the way he is."
Indeed, when Tripoli flew Antrodoco officials to Libya in June to meet Gaddafi in his tent, Italian media reported the event made it on to the front pages of Libyan newspapers, with one, Al Manara, headlining its story: "Gaddafi saves an Italian village from unemployment."
At his office, Faina showed photos of him meeting Gaddafi and visiting a site bombed by the United States. Other officials recall staying at a luxury waterfront hotel and being whisked through VIP airport facilities.
Initially, the town presented three potential projects that included a soccer stadium, but the Libyans opted for a hotel next to a thermal spa complex and the bottling plant, said Faina. Details of the deal remained unclear, but Libya had promised work would start soon, he said.
Rome and Tripoli kept up business ties even in the years when Gaddafi lambasted Italy over its colonial rule, but deals have accelerated recently while political ties have warmed.
Mindful of the $65 billion Libyan sovereign wealth fund's spending power at a time of recession and Italy's own reliance on Libyan oil imports, Berlusconi signed a friendship treaty with Libya in 2008 which includes a $5 billion reparations deal over colonial misdeeds.
Italy has since rolled out the red carpet for Gaddafi during multiple visits in the space of a year, even allowing him to address Romans from the Michelangelo-designed Campidoglio square, an occasion he used to rail against elected government.
Libya, meanwhile, has made bought minority stakes in UniCredit and the oil company Eni, and has expressed interest in others such as power company Enel.
Economic analysts say Libya's investment drive in Italy has only just begun, while Italian firms such as defense giant Finmeccanica and builders like Impregilo stand to gain lucrative contracts in Libya as it improves its infrastructure.
Gaddafi's visit to Italy on Monday marks the second anniversary of the friendship treaty and among those invited to attend a dinner in his honor are Mayor Faina and his entourage.
The invitation signed by Berlusconi has been tacked on to the notice board in the main town square as a matter of pride.
"So many people ask, 'Why did Gaddafi stop in Antrodoco?' said Faina. "We're very lucky indeed."
Editing by Andrew Dobbie