Italy crisis: Mario Monti moves to form new government

 

Mario Monti: "A future of dignity and hope" for Italy's children

Mario Monti is starting work to form a new government to lead Italy out of its acute debt crisis which prompted the resignation of PM Silvio Berlusconi.

The appointment of Mr Monti, an ex-EU competition commissioner, was announced by Italy's president on Sunday.

Mr Monti said he wanted to build "a future of dignity and hope" for Italy's children.

Global markets have responded cautiously to the creation of the emergency government.

In what was seen as the first test of Mr Monti's leadership, Italy sold 3bn euros ($4.2bn, £2.6bn) of new five-year bonds on Monday.

However, it had to pay more to borrow the money, a rate of 6.29%, indicating continuing unease in the markets.

Mr Berlusconi was forced to resign when the yield on Italian bonds rose to more than 7% last week, the rate at which Greece, Ireland and Portugal were obliged to seek bailouts from the EU.

Earlier, European financial markets opened slightly up. Asian stocks also closed up, with Hong Kong's Hang Seng index surging 2% to 19,508.18 and Japan's Nikkei closing up 1.1% at 8,603.70. The euro rose against the dollar on Asian markets.

'Strength not weakness'

Mr Monti, a 68-year-old economics professor, has refused to set a timetable for the formation of the new government or say who he plans to nominate as ministers.

Analysis

For a brief moment Mario Monti - the ex-EU commissioner who will be the next Italian prime minister - will enjoy a honeymoon.

The Italians weary of the Berlusconi years will give him a chance. But as an Italian MP said to me last week outside the parliament, every step he and his cabinet of technocrats takes will be political.

There is nothing more political than legislation on pensions, wages, and taxes started with his work.

He will hold consultations with all political parties as well as unions and industrial groups, before the formal line-up of the new technocratic government is announced later this week.

Speaking after his appointment, he said Italy "must again be, and must increasingly be, an element of strength, not weakness, in a European Union that we helped found and in which we should be protagonists".

He promised to act "with urgency" and work with parliament "to get out quickly from a situation which has elements of an emergency but which Italy can overcome with a united effort".

President Giorgio Napolitano said his nomination of Mr Monti was not about overturning the result of the elections of 2008 and that the situation could not wait for elections to be held.

Italy needed a government that "could unite the diverse political forces in an extraordinary effort warranted by the current financial and economic emergency", he said.

'Encouraging signal'
Mario Monti (right) talks to the press 13 November 2011 Mr Monti's appointment is favoured in financial circles

Mr Berlusconi, who had lost his parliamentary majority, resigned on Saturday after new austerity measures were passed by both houses of parliament.

In a recorded TV address on Sunday, he pledged to support a technocratic government and redouble his own efforts in parliament to modernise Italy.

Most centrists and centre-left parties in the opposition have already pledged their support to Mr Monti.

However, Mr Berlusconi's main coalition ally, the Northern League, has withheld its support until his policies have become clear.

In Brussels, European Commission chief Jose Manuel Barroso and EU President Herman Van Rompuy issued a joint statement welcoming Mr Monti's appointment as "a further encouraging signal... of the Italian authorities' determination to overcome the current crisis".

Mario Monti

  • Born in 1943 in northern Italy
  • Taught economics at Turin University for 15 years
  • 1994-1999: EU commissioner for internal market
  • 1999-2004: EU commissioner for competition
  • Rector then president of top Bocconi University in Milan
  • On 11 November 2011, sworn in as a senator for life
  • 13 November: Nominated PM-designate

Mr Monti, a well-respected economist, is exactly the sort of man that the markets would like to see take charge at this time of crisis, says the BBC's Alan Johnston in Rome.

But there is significant opposition to him within the country, and a feeling that Italy's troubles are just too deep for a mere change of government to make any rapid, significant difference, our correspondent adds.

The austerity package foresees 59.8bn euros in savings from a mixture of spending cuts and tax rises, with the aim of balancing the budget by 2014. Measures include sales of state property, a freeze on public-sector salaries until 2014 and measures to fight widespread tax evasion.

The Italian economy has grown at an average of 0.75% a year over the past 15 years.

Mr Monti's appointment comes two days after Greece, under even greater pressure from Brussels, inaugurated a technocratic government to cope with its debt problems and ratify a vital EU bailout deal.

Interim leader Lucas Papademos will face a confidence vote in the Greek parliament on Wednesday, before attending a meeting of eurozone finance ministers in Brussels on Thursday.

 

More on This Story

Global Economy

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    +2

    Comment number 173.

    Whatever happens, be aware that we are living through momentous times. Hope that wisdom triumphs over political ambition, dogma and self-interest. What matters now is the route out and not the one that brought us here, littered though it is with unwise decisions.

  • rate this
    -5

    Comment number 104.

    Austerity measures will hit the poor and average earners. The rich may have to opt for stainless bathroom fittings on the second yacht rather than gold..!
    Until these gaps, these differences in the wealth of people living in the same country are addressed we will bounce from one nightmare to the next, from one revolution to the next. It must change..!

  • rate this
    0

    Comment number 60.

    I agree with almost every post here... We are seeing the end of European Democracy... These are dangerous times. We could well see massive revolutions throughout Europe as the "Austerity" measures are forced upon people.... What will Germany do if Italy's new government are ousted by the people... Send in the troops? Dangerous times indeed....!

  • rate this
    0

    Comment number 57.

    This is the equivalent of me changing my name to get around a credit card debt.

    The debt will still be there who ever is in charge.

  • rate this
    +4

    Comment number 49.

    Throwing yet more money to a debt ridden nation will not solve it's crisis. How will they ever pay it back? It's like giving more drink to an alcoholic. .All it's achieving is delaying the inevitable bankruptcy.

 

Comments 5 of 13

 

More Europe stories

RSS

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.