Economist Monti to Quickly Form New Italian Govt
Economist Mario Monti accepted the monumental task Sunday of trying to form a new government that can rescue Italy from financial ruin, expressing confidence that the nation can beat the crisis if its people pull together.
His selection came a day after Silvio Berlusconi reluctantly resigned as premier, bowing out after world markets pummeled Italy's borrowing ability, reflecting a loss of faith in the 75-year-old media mogul's leadership. Berlusconi quit after the Italian parliament approved new reform measures demanded by the European Union and central bank officials — but even those are not considered enough to right Italy's ailing economy.
"There is an emergency, but we can overcome it with a common effort," Monti told the nation, shortly after Italy's president formally asked him to see if he can muster enough political support to lead the country out of one of its most trying hours since World War II.
"In a moment of particular difficulty, Italy must win the challenge to bounce back, we must be an element of strength and not weakness in the European Union, of which we are founders," he added.
Monti must now draw up a Cabinet, lay out his priorities, and see if he has enough support in Parliament to govern. Rival political parties offered various degrees of support, including one demand from Berlusconi's party — the largest in Parliament — that his government last only as long enough as it takes to heal Italy's finances and revive the economy.
The 68-year-old economics professor is no pushover, earning a reputation for staring down challenges as a tough EU competition commissioner. But he'll have to win a confidence vote in Parliament before he can lead the nation.
Monti told reporters he will carry out his task "with a great sense of responsibility and service toward this nation." Italy must heal its finances and resume growth because "we owe it to our children, to give them a concrete future of dignity and hope."
Berlusconi's party also demanded that only technocrats — not politicians — make up Monti's Cabinet in exchange for its crucial support.
Monti faces a daunting challenge — preventing an Italian default that could tear apart the 17-nation eurozone and send Europe and the U.S. into new recessions.
Italy's economy is hampered by high wage costs, low productivity, fat government payrolls, excessive taxes, choking bureaucracy, and an educational system that produces one of the lowest levels of college graduates among rich countries.
In addition, as the third-largest economy in the eurozone, Italy is considered too big for Europe to bail out like Greece, Portugal and Ireland have been.
The next Italian government needs to push through even more painful reforms and austerity measures to deal with euro1.9 trillion ($2.6 trillion) in debt — about 120 percent of the country's economic output. And many of those debts are coming due soon — Italy has to roll over more than euro300 billion ($410 billion) of its debts next year alone.
Some political forces, including some from Berlusconi's ranks and that of his allies, have been clamoring for early elections. But President Giorgio Napolitano cited approaching treasury bond auctions — one as early as Monday and other bonds maturing in the next few months — as a main reason he decided to "avoid early elections and the consequent government vacuum" until a new one could be formed.