Here in the region they call "the Triangle of Death," a sprawling urban wasteland around the southern city of Naples, two rival powers are locked in battle.

On one side is the Italian state with its police and its magistrates, its politicians and its social workers. On the other is the Camorra, a criminal empire founded more than a century ago along the lines of the Sicilian Mafia, a state within a state that today provides work for approximately 100,000 people.

For years, the two powers ruled side by side, competing at times but accepting the fact of each other's existence. The unwritten truce ended a month ago, in the early morning hours of Friday, June 17, when Naples magistrates issued 856 arrest warrants for "illegal association," a catchall accusation used against Camorra and Mafia suspects. The word camorra is thought to have entered the language during the Spanish occupation of southern Italy in the 17th century and is derived from the old Spanish word morra, meaning a group of soldiers.

Among the prominent citizens picked up in dawn raids all over Italy were a Roman Catholic nun, a couple of mayors, the commissioner for tourism in the Naples region, the chaplain and head guard at one of the country's biggest prisons, a popular singer and a television personality.

The arrests, which were the result of months of investigation, created a major political stir in Italy on the eve of general elections. They have been described by anti-Camorra campaigners as "the first real proof" of the government's determination to tackle an organization that is believed to have been responsible for nearly 1,000 murders during the past three years.

Everybody acknowledges, however, that the battle is far from won.

"This is a very delicate time," explained Antonio Riboldi, the bishop of Acerra who has led three protest marches against the Camorra in the past year.

"The magistrates have succeeded in lifting a corner of the curtain. Either they will pursue this right to the end or they will be frightened and draw back. We don't know what will happen. Any day can produce a sensation."

The bishop's uncertainty reflects the shadowy nature of the war that is now being fought. Like the Mafia, the Camorra is more than just a powerful criminal organization. It is an underground society held together by the law of omerta, or silence, with tentacles that reach right into the official state. Nobody knows how it will strike back.

"This place is like Chicago in the days of Al Capone. Things happen here that you wouldn't believe," remarked a foreign consul who just a few days before had suffered the indignity of having his wallet snatched from his hand by a thief as he was sitting in a barber shop.

With different Camorra factions massacring each other in the streets, and most of the shopkeepers in the region paying protection money to racketeers, Naples does resemble Chicago in the 30s. The impression is heightened by the nicknames given to the principal actors in the drama: "the professor" for imprisoned Camorra leader Rafaele Cutolo, "the iron prefect" for police chief Riccardo Boccia, "the animal" for a Camorra killer turned police informer and "Angel Face" for a criminal eventually stabbed to death in jail.

The number of killings in the region has risen dramatically since 1981 when Cutolo attempted to impose his authority over the Naples underworld and ruthlessly eliminated anyone who got in his way. His plan, conceived and implemented in a Naples prison while he was serving a life sentence for murder, was to transform the Camorra from a loose federation of criminal gangs into a disciplined, hierarchical organization.

This scheme met with violent opposition from rival Camorra bosses. The bloodletting was particularly ferocious around Cutolo's hometown of Ottaviano beneath Mt. Vesuvius where the decapitated body of a noted criminologist was found on the street. In nearby Acerra, with a population of 50,000, the number of murders in one year has risen from one to 40.

In the end, Cutolo and his lieutenants succeeded in creating a 5,000-strong army by using the prisons as recruiting grounds and training schools for criminals. Members of the "new organized Camorra" range in rank from lowly foot soldiers charged with "fetching the laundry"--Cutolo's euphemism for collecting protection money--to powerful capozoni or district heads.

In return for blind obedience to Cutolo's orders, which until fairly recently were transmitted by his sister Rosetta, Camorra members were paid a fixed salary. If they were imprisoned, their families received "social security" payments. At the height of his power, Cutolo was able to arrange transfers from one prison to another, provide his followers with jobs in the civil service or a private corporation or instruct an execution squad to mete out instant "justice," according to internal Camorra documents confiscated by Italian police.

On one celebrated occasion in 1981, Cutolo even acted as an intermediary in securing the release of a prominent local politician, Ciro Cirillo, who had been kidnaped by the left-wing terrorist group known as the Red Brigades.

"Sometimes one gets the impression that, of the two rival states, it is the Camorra which is the more efficient," Bishop Riboldi said. "If, for example, I ask the official authorities for permission to build a house, it can take two to three years before I get a reply. The Camorra will authorize the building immediately, but of course there's always a price attached."

In addition to full-time Camorra members, who reportedly are initiated by taking part in an elaborate blood pact, a host of other people live off the organization. These include the 40,000 Neapolitans who make a living selling smuggled cigarettes on the streets, a trade that is controlled by the Camorra. Then there are the drug pushers, the drivers of unlicensed taxicabs and workers in construction companies set up by the Camorra after the earthquake of November 1980.

The recent police successes against the Camorra were made possible by the 3,000-page confession of Pasquale (the Animal) Barra, a 41-year-old convicted murderer and right-hand man to Cutolo. His nerves apparently cracked after he knifed a member of the Sicilian Mafia in prison on Cutolo's orders. Fearing retribution, he started talking to the police in return for a promise of protection.

Pasquale's confessions, and evidence obtained under a new anti-Mafia law that allows police to tap telephones and pry into private bank accounts, have enabled investigators to build up a detailed picture of the Camorra. There is talk in Naples of a possible second wave of arrests that would strike at the financial and political power behind the organization.

According to details leaked to the Italian press, Cutolo was able to run the Camorra effectively from jail because of help from corrupt prison officials. A nun who visited him regularly, Sister Aldina Murelli, has been accused of acting as his messenger. Coded letters confiscated from her convent refer to Cutolo as "God," his sister Rosetta as the "madonna" and rank-and-file members as the "saints."

Sister Murelli has indignantly rejected all the allegations, insisting that she had been on the verge of getting Cutolo to repent for his sins. Similar denials have come from other prominent figures implicated in the investigation including Enzo Tortora, one of Italy's best-known television personalities, who is accused of involvement in cocaine smuggling.

Senior police officers are confident that they have broken the power of Cutolo, who was transferred away from Naples last year to a top-security prison on the island of Sardinia. They agree, however, that the Camorra phenomenon will be much more difficult to defeat.

Police Chief Boccia, who is spearheading the government's drive against the Camorra, believes that his real enemy is the degrading poverty and chaotic social conditions of Naples.

"The Camorra will not be beaten merely by arrests and police operations when there are 140,000 unemployed in Naples alone and 600,000 in the region. Theoretically all these people should be dying of starvation... Instead they find ways to survive by inventing a thousand trades," he remarked in an interview with the newspaper La Repubblica.

"You can't understand Cutolo if you don't see that this city has no future, no present, and no work."