Monti unveils new Italian government

Monti has received the backing of both the country’s main parties [AFP]

Mario Monti has been sworn in as Italy’s prime minister, shortly after he announced a new government to deal with the crisis that has brought the country to the brink of economic disaster and endangered the entire eurozone.

Monti, a former European commissioner, was the first member of the new government to be sworn in by President Giorgio Napolitano at the Quirinale Palace on Wednesday.

Corrado Passera, chief executive of Italy’s biggest retail bank Intesa Sanpaolo, will head up a reinforced economic development and infrastructures ministry charged with boosting the anaemic growth rate.

After disputes among the parties which complicated Monti’s task, the new government contained no politicians as he was reported to have wanted.

Some analysts say the lack of politicians in the administration could make it more vulnerable to ambushes in parliament as it pushes through unpopular measures.

But Monti said the lack of politicians would strengthen, rather than weaken, the government by enabling it to avoid political disputes and push ahead with vital reforms. 

“The absence of political personalities in the government will help rather than hinder a solid base of support for the government in parliament and in the political parties because it will remove one ground for disagreement,” he said.

Monti said he would present his austerity programme, to the Senate on Thursday. This is expected to be followed by a confidence vote in both houses of parliament.

The reforms were demanded by European leaders to stem a crisis at the centre of the eurozone’s problems.

Parliamentary backing

The new administration was formed in less than three days, as President Giorgio Napolitano pushed through negotiations in the face of a crisis that had seen market confidence in Italy begin to collapse.

Close associates of Silvio Berlusconi, who resigned as premier on Saturday, have promised that his party will give full support to Monti, a former European Union competition commissioner.

Monti’s new government must have strong parliamentary backing to implement what are likely to be unpopular austerity reforms.

Any failure or delay in his efforts would cause a devastating new assault from financial markets.

After a brief respite at the end of last week, when it became clear Berlusconi would resign, Italy’s borrowing costs have now returned to critical levels amid uncertainty over whether Monti would succeed.

Rescuing Italy, which has $2.6 trillion of debt, would be too much for the eurozone’s existing financial defences.

Monti has said his government should last until the next scheduled elections in 2013, despite widespread expectation that politicians intend to give him only enough time to implement reforms before precipitating early polls.

“I hope that this government of technocrats succeeds in addressing all the requests made by the European Central Bank in its letter,” outgoing Industry Minister Paolo Romani, from Berlusconi’s PDL party, told the Corriere della Sera newspaper.

“But let it be clear that as soon as that is done, we expect Monti to give the people the chance to choose a government.”