Quantcast

Monti meets Italian parties as markets turn sour

By Nicole Winfield

Associated Press

Published: Tuesday, Nov. 15 2011 6:00 a.m. MST

Italian Democratic party leader Pierluigi Bersani, center, address the media as Senator Anna Finocchiaro, left, and Dario Franceschini look on, following talks with Italy's new premier-designate economist Mario Monti, at the Senate, in Rome, Tuesday, Nov. 15, 2011. Monti is holding talks with political leaders, unions and business groups as he tries to put together a cabinet that can steer Italy through its debt crisis.

Pier Paolo Cito, Associated Press

ROME — Italy's premier-designate Mario Monti held crucial meetings Tuesday with the leaders of the country's biggest political parties as he worked to put together a cabinet that can win parliamentary backing and steer the eurozone's third-biggest economy through its debt crisis.

Both the center-left Democratic Party and ex-Premier Silvio Berlusconi's Peoples of Liberty party said they fully backed Monti. But investors worried that they might pull their support in the future if austerity measures proved unpalatable, undermining the success of much-needed reforms.

That prospect weighed on Italy's markets, with the yield on the 10-year bonds jumping again by 0.44 of a percentage point to 7.02 percent. Last week's spike above 7 percent raised fears Italy would eventually need a bailout like Greece.

"Each time he will present a new measure, a new cut, a new reform, the same parties will have to continue giving him support," said Andrea Mandel-Mantello, the chairman of Advicorp investment bank. Politicians can "unload" the responsibility of making tough decisions on Monti without fear of losing electoral ground, "but the markets will judge things as they happen."

Monti, a respected economist and former European commissioner, is under pressure to quickly reassure markets that Italy will avoid a default that could tear apart the coalition of 17 countries that use the euro and push the global economy back into recession.

Italy is considered too big for Europe to bail out, in contrast to Greece, Portugal and Ireland.

Monti met Tuesday morning with the head of the Democratic Party and Angelino Alfano, secretary of Berlusconi's Peoples of Liberty party. Support from the parties' lawmakers will be crucial in a confidence vote, likely this week, which would signal the start of Monti's government.

"We think in light of the facts and after this latest conversation that Professor Monti's attempts are destined to turn out well," Alfano told reporters after meeting with Monti.

Previously, the party had conditioned its future support on the shape of Monti's cabinet, his government agenda and the duration of his term. Berlusconi's allies want elections as soon as this spring, something rejected outright by Monti.

But Monti, a 68-year-old economics professor, made clear that he intends to serve until spring 2013 elections, calling it counterproductive to say when he'd step down.

"If a date before (2013) is set, this haste would take away credibility from the government's actions," Monti said at his brief news conference. "I won't accept" such a condition, he said.

Pierluigi Bersani, head of the Democratic Party, pledged his support Tuesday morning and placed no artificial timeframe on Monti's tenure.

President Giorgio Napolitano tapped Monti on Sunday to try to form a government after Berlusconi resigned after weeks of market turmoil over Italy's stagnant growth and high public debt, which at €1.9 trillion ($2.6 trillion) is nearly 120 percent of GDP.

Many of those debs are coming due soon, with Italy having to roll over more than €300 billion ($410 billion) of its debts next year alone.

The EU has already said new measures will be necessary for Italy to balance its budget as promised by 2013. Asked Monday if new "corrective" measures were needed to deal with its debt load, Monti said it was "premature" to speak at this point.

He said Italians would have to make some sacrifices to get through the crisis but "not tears and blood."

Whether political parties will keep supporting Monti when he presents tough economic reforms will be crucial to his government's success.

"The markets are registering the indecision on the part of the parties to support the government, and clearly this government needs wide political support," said Gianluca Piredda as he headed out on a chilly Roman morning. "This uncertainty does not help."

Later Tuesday, Monti has meetings scheduled with union leaders, the main business lobby and representatives of youth social groups — an indication he wants to consult with a broad base of Italian representatives before laying out his government agenda.

Ordinary Italians on average seemed to welcome Monti, but remained skeptical about the future, given the enormity of the government debt and worries that political support might waver in the long run.

Tricia Thomas contributed to this report.

Get The Deseret News Everywhere

Subscribe

Mobile

RSS