Greece’s new leader vows to accept EU bailout terms. A5.
The once-unstoppable Berlusconi had pledged to step down as soon as the Italian Parliament passed austerity measures demanded by the European Union. Until yesterday, the timetable was unclear, and it seemed that Berlusconi was hoping to buy himself more time in power. But now, with the Senate expected to approve the measures today and the Lower House tomorrow, Berlusconi is expected to step down by Monday.
Asked what had sped up the process, Stefano Micossi, an economist and the director of Assonime, an Italian business research group, put it simply: “The view of the precipice.’’
The transition - which materialized on the same day that Greece named its own new technocratic government under Lucas Papademos, an economist and former head of the Bank of Greece - had been held up by infighting among members of Italy’s entrenched political class, who were anxious to preserve their power, privileges, and political bases. A major break in the gridlock came yesterday when a bloc of Berlusconi’s People of Liberties party made clear that it would back an emergency government of national unity led by a nonpolitician, which would require a majority in Parliament.
That was largely because of the quiet yet forceful maneuvering of Italy’s president, Giorgio Napolitano, an 86-year-old former member of the Italian Communist Party and respected statesman who is now overseeing Italy’s most significant political transition in 20 years. On Wednesday, Napolitano named Monti senator for life, transforming him from a technocrat to a newly minted politician, untainted by previous legislatures. Monti was expected to appear in the Senate today for passage of the austerity measures.
But even as momentum built for Monti’s candidacy, it was not assured. The difficulties in Greece in naming Papademos interim prime minister of a unity government offered a cautionary tale. One key unresolved question is the political formation of the transitional government, which will affect its ability to make changes. Many politicians do not want to be associated with the passage of tough measures that might reduce their power and reelectability.
Berlusconi and a key party in his center-right coalition, the Northern League, have insisted that they want early elections rather than allowing a technocrat to govern Italy. But with the extreme market pressures, it was looking increasingly unlikely that Italy could weather the weeks or months of instability ahead of elections.
In spite of the financial market angst about Italy, the country’s economic fundamentals remain strong. It is Europe’s third-largest economy and its budget deficit is a relatively manageable 4.6 percent, compared to a projected 8.5 percent in Greece in 2012. But Italy’s economic growth has stopped, and it is seen as needing technocratic leadership to restore its international credibility after the Berlusconi era.
