Italian prime minister unveils austerity plan

Mario Monti says nation faces “serious emergency” as he outlines what he says are necessary, but unpopular, budget cuts.

Italian police clashed with demonstrators during a protest in Milan on Thursday against proposed budget cuts [Reuters]

Mario Monti, Italy’s new prime minister, has said that Italy faced a “serious emergency” as he outlined austerity measures aimed at restoring investor confidence in the country’s strained public finances.

“The government recongises that it was formed to resolve a serious emergency in a constructive and united spirit,” he said on Thursday during his first address to parliament since being appointed the previous day.

Monti, rushing to end a collapse in market confidence that has pushed Italy’s borrowing costs to critical levels, said he would consider additional measures after fully implementing promises made to the European Union but never carried through by his predecessor, Silvio Berlusconi.

The former European commissioner said he will target widespread tax evasion, sub-standard education and training and Italy’s creaking welfare system, as well as reforming the labour market.

In a 45-minute address, he said the key goals of his technocrat government would be to improve public services and help women and young people to get jobs.

Making clear that he would target cutting Italy’s huge public debt and stimulate growth, Monti said Italy had a higher average retirement age than in France and Germany, and that chronic tax evasion must be fought while reducing the overall tax burden.

He said he would also set out a schedule for the sale of public assets.

In another shot at a major problem with the Italian economy, Monti said the use of cash should be reduced to cut an underground economy that accounts for nearly 20 per cent of GDP.
He also promised to reduce the cost of Italy’s political system and cosseted politicians, which caused increasing public outrage under the watch of Berlusconi.

Al Jazeera’s Claudio Lavanga, reporting from Rome, said that Monti’s speech was “welcome by about 17 applauses and a standing ovation”.

Following his address, the prime minister easily won a vote of confidence in parliament’s upper house. He faces a second in the lower house on Friday.

Cabinet of technocrats

Monti, who unveiled a cabinet of technocrats on Wednesday, has been entrusted with the task of reducing a public debt of $2.6tn and restoring economic growth.

With Italy at the heart of the eurozone debt crisis, the measures Monti has announced are unlikely to be enough on their own to rebuild shattered market confidence.

Italy’s technocratic government

 Mario Monti – Prime minister and economy minister. Former European Commissioner

 Corrado Passera – Minister of development, infrastructure and transport. CEO of Italy’s largest retail bank, Intesa Sanpaolo

 Antonio Catricala – Cabinet undersecretary. Head of antitrust authority

 Elsa Fornero – Labour minister. Economics professor, University of Turin. Expert on welfare and pensions

 Giampaolo Di Paola – Defence minister. Navy admiral. Chairman of Nato Military Committee. Former Chief of Staff of Italian military

But they will be vital to restoring credibility with international partners who had long lost patience with the repeatedly unfulfilled promises of Berlusconi.

Monti took the key economy and finance portfolio himself and appointed Corrado Passera, chief executive of Intesa Sanpaolo, one of Italy’s big two banks, as industry minister in an unelected cabinet which contained no politicians.

Monti said on Wednesday he was confident that his new government would help restore confidence to panicked financial markets, but the task he faces was underlined by the continued surge in Italian bond yields.

Yields on the country’s 10-year bonds have hovered around seven per cent.

That level forced Greece and Ireland to seek an international bailout and would overwhelm the eurozone’s current financial defences if it were needed by Italy, the bloc’s third largest economy.

European leaders have welcomed the appointment of Monti, a sober and reserved economist and tough negotiator with a decade of experience as a European commissioner.

Jean-Claude Juncker, chairman of the eurozone finance ministers group, said he was pleased that Monti had taken the finance portfolio himself and described him as “the man for the situation”.

Monti has said he wants to serve until the next scheduled elections in 2013, but the refusal of the main parties to allow politicians to join his cabinet could make it harder to gain popular support for measures designed by unelected technocrats.

Protests and clashes

Monti’s choice of unelected experts to lead the government and the prospect of tough reforms have fuelled unrest among some Italians who have labeled his cabinet a “banker’s government”.

Students clashed with police across Italy on Thursday in protests against budget cuts, while transport strikes idled buses and trains.

Police in riot gear scuffled with students in Milan, where they planned to march to Bocconi University, which forms Italy’s business elite. Monti is Bocconi’s president.

“The government of the banks,” read one placard held by a youth marching in the protest in Milan.

In Palermo, Sicily, demonstrators hurled eggs and smoke bombs at a bank, and protesters threw rocks at police who battled back with pepper sprays, the Italian news agency ANSA said.

One protester was injured in the head in Palermo, where police charged demonstrators who were trying to occupy another bank, it said.

In Rome, hundreds of students gathered outside Sapienza University, while others assembled near the main train station. They planned to march to the Senate.

Antonio Romano, who was distributing leaflets to protesters, said the government’s strategy was to “make the workers and retired people pay for the crisis, not those who provoked the crisis, I mean big business, bankers”.

University and high school students, as well as young people unable to find full-time jobs joined the protest.

In Rome, marcher Titti Mazzacane said she was skeptical about the new government.

While Monti chose “decent and competent people,” the government “is a little bit too free-market liberal. I am a bit scared,” said the 53-year-old elementary school teacher.

Source: Al Jazeera, News Agencies


Economics professor and seasoned bureaucrat steps into political frontline as Italy’s new prime minister.

14 Nov 2011
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