Saturday, November 12, 2011

Italy’s Berlusconi set to resign after new budget law Passes

ROME — Italy’s lower house on Saturday was expected to pass austerity measures sought by the European Union, paving the way for the planned resignation of Prime Minister Silvio Berlusconi after the vote, when the cabinet was set to meet.

Saturday’s vote follows an equally speedy approval for the economic measures from the Senate on Friday, as Parliament moved to stay a step ahead of market pressures that sent borrowing rates on Italian bonds skyrocketing last week to levels that have required other euro zone countries to seek bailouts.

The measures are aimed at reducing Italy’s $2.6 trillion public debt and increasing growth by selling $21 billion worth of state assets and increasing the retirement age to 67 from 65 by 2026. It also would loosen the power of professional guilds, liberalize municipal services and offer tax breaks for infrastructure and companies that hire young workers.

President Giorgio Napolitano, who as head of state must oversee any government transition, was expected to begin consultations with party leaders to nominate a prime minister immediately after Mr. Berlusconi’s resignation.

The front-runner appears to be Mario Monti, 68, a former European commissioner and a well-respected economist with close ties to European Union officials. On Wednesday, Mr. Napolitano named Mr. Monti a senator for life, an unexpected move that was seen as a prelude to receiving the mandate to form a government.

On Saturday morning, Mr. Monti met with Mario Draghi, the recently installed president of the European Central Bank, reinforcing the notion that financial and European institutions strongly supported the appointment of the respected economist in a moment of economic and political turbulence.

But even as Mr. Napolitano was poised to usher in a new era, Italy’s political parties were entrenched in an ancient ritual that suggested that Mr. Monti’s chances — both at becoming prime minister and then creating a stable government able to pass the unpopular measures demanded of tough economic times — were not guaranteed.

“Monti, Give Up,” read a five-column headline in the Milan daily Il Giornale, which is owned by Mr. Berlusconi’s family.

The main obstacle to Mr. Monti’s government could come from Mr. Berlusconi’s increasingly divided center-right coalition. Many members would rather go to early elections than have a technocrat backed by the European Union foisted on them.

“I think that it is necessary to go to the polls,” the minister of infrastructure and transport, Altero Matteoli, said Friday in an interview on Sky TG24. “I don’t believe the markets should decide governments.”

There are also divisions among those who are concerned that elections would lead to an unsustainable period of market turmoil and so opt for a transitional government.

Those lawmakers are divided between those who would like a government of national unity, in which members of the right and the left would pass legislation and share the political cost, or a formation in which both coalitions would support the new government and vote on legislation, but leave the ministerial positions to nonpoliticians.

In many ways, the end of the Berlusconi era has revealed the deep divisions and unresolved questions of Italy’s political class, which has not entirely recovered from the cold war. The left is divided between neo-liberals and former communists and the right between neo-fascists and post-ideological Berlusconi supporters. The former Christian Democrats, who governed Italy throughout the postwar period, are now scattered between right and left.

On Saturday, the intense political debate laid bare all the paradoxes in Italian politics today.

The prospects of a Monti government have revealed the “very eccentric” nature of Italian politics, said Norma Rangeri, editor in chief of the left-wing daily newspaper Il Manifesto. Mr. Monti, she said, is a liberal conservative whose nomination is being blocked by the center-right, while the center-left, which supports him, “should be looking for the opposite of what Monti represents.”

“What is opening is the most uncertain scenario that we can imagine,” she said.

Dozens of television cameras and bystanders congregated in front of Palazzo Chigi, the prime minister’s office, on Saturday, ahead of Mr. Berlusconi’s expected resignation. His stepping down as prime minister would mark the end of an era in which he dominated Italian life.
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