By Crispian Balmer

ROME (Reuters) - Dirty and disorganized, Rome is once more in decline.

City hall is paralyzed by allegations of Mafia infiltration, basic services are in tatters, the main airport is partially closed, and wild cat strikes have frayed an already ropey public transport network.

For generations, the Italian capital has rested on past glories rather than built on them. The years of neglect, corruption and bureaucratic bungling have taken a fierce toll, reflecting a wider malaise that afflicts Italy as a whole.

"Rome is on the verge of collapse," Giancarlo Cremonesi, the president of the Rome Chamber of Commerce, told Reuters. "It is unacceptable that a major city which calls itself developed can find itself in such a state of decay."

One of the 10 biggest cities in Europe, with a population of 2.8 million, Rome boasts some of the most spectacular squares, fountains, museums and churches in the world.

But like its ancient monuments, its problems are plain for all to see, starting at the main international gateway into the city, Fiumicino, Italy's largest airport, which is struggling to bounce back from a fire that broke out on May 7.

Although the blaze was confined to just part of one of its three terminals, more than two months later, 40 percent of all flights still have to be canceled each day because of a dispute over the danger posed by contaminants unleashed by the flames.

Magistrates sealed the site for weeks to gauge the air quality, while various public bodies argued over how airports should be classified when it came to measuring pollution.

"In this case you see many things that are typically Italian. For example the role of the magistrates," Vito Riggio, the head of the Italian Civil Aviation Authority, told Reuters.

All the fire-damaged material should have been immediately removed to speed up the rebuilding, he said.

"Instead the place was officially sealed. Nobody could enter and the source of the (contaminants) continued to pollute. It is not hard to grasp, but no one said anything, not even the government. I don't believe other countries are like that."

The prosecutors' office dealing with the case said the sequestration order was lifted on June 24 and there was no legal impediment preventing a return to normal operations, although its investigation continues.

No date has been set for a full re-opening and the smell of burnt plastics lingers in the departures halls.

MAFIA MESS

A much larger investigation has engulfed Rome city hall, housed in a Renaissance palace designed by Michelangelo and gazes out across the ruins of the ancient Roman forum.

The "Mafia Capital" probe, which hit the headlines last December following a first wave of arrests, has rattled Italy, suggesting that organized crime was flourishing far beyond its traditional southern bastions.

Buried under 14 billion euros ($15.5 billion) of debt, Rome was saved from bankruptcy last year by emergency state funds. The mafia scandal has helped explain the financial mess, with wiretap transcripts suggesting mobsters had siphoned off millions of euros from a string of lucrative contracts, covering everything from recycling paper to sheltering immigrants.

Italy is struggling to shake off its worst post-World War Two slump, a three-year slide that has driven unemployment up to 1970s levels. While the real economy plunged, the illegal one, such as that unmasked in Rome, has spread and thrived.

Much of the alleged corruption dates back to the time of the previous mayor, Gianni Alemanno, a former right-wing minister who is under investigation. He denies any wrong-doing.

However, magistrates say the mobsters' tentacles have also delved into the current administration, run by Ignazio Marino, a liver transplant surgeon and an ally of center-left Italian Prime Minister Matteo Renzi.

While Marino is not implicated, a number of his staff have come under scrutiny, leading to a stream of resignations. A city source says an official review has recommended that around 30 major public contracts be annulled and re-offered for tender.

In a letter to Corriere della Sera newspaper, published on Monday, mayor Marino conceded that much of Rome's public administration was "substantially rotten".

But, in the same way that Renzi was trying to change Italy with a battery of reforms, so he was looking to shake up sclerotic Rome, he said. "There is strenuous resistance to any type of change (here) ... but I will never give up," he wrote.

With grass running wild by the kerbsides and graffiti spreading like garish vines along buildings, Marino this month put together a 500-strong taskforce of employees and volunteers to help clean up Rome's neglected green spaces.

"Rome is falling apart at the seams," the city's main newspaper, Il Messaggero, lamented on its frontpage last week. On an inside page it reported a rat infestation in the center.

A 2013 European Commission survey placed Rome last out of 28 EU capitals in the rankings for the efficiency of city services. Despite its fine cuisine and sunny climate, Rome came second to last for quality-of-life satisfaction. Athens was bottom.

Rome also came last when it came to satisfaction with public transport. This summer's chaos will not have improved sentiment.

RUBBISH AND PICKPOCKETS

Metro drivers have staged a series of go-slows to protest at a new norm requiring them to clock into work. The mayor says this is needed to boost productivity, arguing that while drivers in Milan work 1,200 hours a year, in Rome they put in 730 hours.

The dispute has led to delays of up to 25 minutes between trains, leaving stranded passengers sweltering in the hottest July for more than a decade and fuelling anger on Internet protest sites like 'Rome Sucks' (Roma Fa Schifo).

Rome is the most popular tourist destination in the country, attracting some 10.61 million foreign visitors in 2014. This was down from more than 11 million the year before and locals say the poor state of infrastructure is hurting.

"All my clients say Rome is beautiful, but all of them, without fail, complain about the services," said Marcello Lazazzera, who owns a small bed and breakfast, Domus Cornelia.

"The metros never arrive on time, the stations are full of pickpockets, the streets are full of rubbish. Instead of getting better, the situation is getting worse."

It could get worse still in 2016, when 25 million pilgrims are expected to flow into the Eternal City in response to Pope Francis's call for an extraordinary Holy Year -- one of the Roman Catholic Church's most important events.

The mayor's office has yet to layout its strategy for coping with the influx, or earmark any funds to cover the cost.

"The prayers of the pope will not be enough. Here we need a miracle from the lord above for Rome to emerge in good shape," said Chamber of Commerce chief, Cremonesi.

(Additional reporting by Stefano Bernabei Writing by Crispian Balmer; Editing by Paul Taylor)