Italy’s new Prime Minister Mario Monti (pictured) said Wednesday that he had formed a new government tasked with battling the country’s financial crisis, and that he would be taking on the role of economy minister himself.
AP – Economist Mario Monti formed a new Italian government without a single politician Wednesday, drawing from the ranks of bankers, diplomats and business executives to make sure Italy escapes looming financial disaster.
The 68-year-old former European Union competition commissioner told reporters he will serve as Italy’s economy minister as well as premier for now as he seeks to implement “sacrifices” to heal the country’s finances and set the economy growing again.
Monti and his new cabinet ministers will be sworn later Wednesday, formally ending Silvio Berlusconi’s 3 ½-year-old government as well as his 17-year-long run of political dominance.
Monti said he would lay out his emergency anti-crisis policies in the Senate on Thursday, ahead of a confidence vote. A second vote, in the lower Chamber of Deputies, will follow, likely on Friday. He stressed that Italy’s economic growth is a top priority.
Hopes for Italy’s new administration won it some respite in financial markets Wednesday. The yield on its ten-year bonds dropped 0.16 percentage point to 6.77 percent. In the last week, that borrowing rate had flirted over 7 percent – the level that forced fellow eurozone members Greece, Ireland and Portugal to seek international bailouts.
Up until summer, Italy had mostly avoided the European debt turmoil despite having a jaw-dropping amount of debt: €1.9 trillion ($2.6 trillion), or is nearly 120 percent of its GDP. But after frequent delays and backtracking on austerity measures, markets lost faith that any Berlusconi government could fix Italy’s economic issues.
Restoring confidence in Italy’s financial future is crucial because, as the third-largest economy in the eurozone, it is too big for Europe to rescue. A debt default by Italy would threaten the euro itself and shake the global economy.
Monti gave few hints about his political program Wednesday, sidestepping a question about whether the government would dip into citizens’ bank accounts as it did decades ago during another debt crisis.
“You may ask,” he replied, but went no further.
Explaining why his Cabinet contained no one from Italy’s fractious political parties, Monti said that his talks with party leaders led him to the conclusion “that the non-presence of politicians in the government would help it.”
His ministers include Corrado Passera, CEO of Italy’s second-largest bank, Intesa Sanpaolo SpA, to head Development and Infrastructure; Piero Gnudi, a longtime chairman of Enel utility company, as Tourism and Sport minister in a country heavily dependent on tourist revenues; and the current Italian ambassador to Washington, Giulio Terzi di Sant’Agata, to be foreign minister.
A historian of the Catholic church with close ties to the Vatican, Andrea Riccardi, was named minister of international and domestic cooperation, a choice that seemed to reward pro-Vatican lawmakers in Parliament.
A Monti government is “an historic and significant turn of events,” said Francesco Rutelli of the pro-Vatican centrists.
Still, his choices raised some eyebrows.
“This government, ties to banks, to business, to the Vatican, to private universities _ to the usual names – is the opposite of what this country needs,” said Paolo Ferrero, leader of Rifondazione Comunista, a tiny, far-left party.
Passera also sits on the board of directors of Milan’s Bocconi University, which forms Italy’s business elite. Monti is currently the head of the Bocconi.
But analysts gave Monti’s selections a top mark, insisting the Cabinet ministers were independent.
“I think the quality of the people is very high,” said Roberto D’Alimonte, a political science professor at Rome’s LUISS University. “All these people are very high-caliber, and highly respected, independent.”
Italy’s economy is hampered by high wage costs, low productivity, fat government payrolls, excessive taxes, choking bureaucracy and low numbers of college graduates. But Monti says Italy can beat the crisis if its largely polarized citizenry – often bitterly divided over Berlusconi’s long tenure – can pull together. He has also met with union leaders and business representatives.
“I hope that, governing well, we can make a contribution to the calming and the cohesion of the political forces,” Monti told reporters.
The head of Italy’s largest union confederation, Susanna Camusso, backed Monti but hoped he “won’t put his priority on pensions.”
Parliament on Saturday voted to raise the retirement age as part of an austerity package to 67 by 2026 and 70 by 2050, but critics say those reforms are meaningless because they are so far in the future. The new changes also call for the sale of state property and privatizing some services but contain no painful labor reforms. They also offer tax incentives to companies that hire young workers to fight Italy’s 25 percent unemployment rate for people ages 15 to 24.
The shift in power away from career politicians had caused bickering within Berlusconi’s conservative People of Freedom Party, which eventually endorsed Monti. But Berlusconi’s main coalition ally, the Northern League, has announced it will stay in the opposition during Monti’s government.
Rutelli predicted on Sky TG24 TV that Monti’s government would win the confidence votes and last until the end of the legislature in spring 2013, to the dismay of many of Berlusconi’s allies, who want elections in a few months.
“The economic crisis won’t be solved in a brief time,” he noted.
Not everyone was enthusiastic about an unelected, technocratic government.
“When governments of technocrats are needed, it means democracy and politics are considered useless, so it’s something negative that has to be for a limited period of time,'' said skeptic Giuseppe Drago on the streets of Rome.
Date created : 2011-11-16