European Debt Crisis as Berlusconi’s Last Stand

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European Debt Crisis as Berlusconi’s Last Stand

Post  yidiandiana on Tue Nov 08, 2011 7:05 pm

The European debt crisis appeared to claim its biggest victim on Tuesday when Prime Minister Silvio Berlusconi of Italy, cornered by the markets and humiliated by a parliamentary setback, pledged to resign after Italy’s Parliament passes austerity measures demanded by the European Union.

Although Mr. Berlusconi’s exit was not immediate — weeks of political wrangling over the austerity measures lie ahead — political commentators said they could see no escape this time for the prime minister, whose ability to wriggle out of other political tight spots is legendary.

“A season is over,” said Mario Calabresi, the editor in chief of the Turin wholesale jerseys daily newspaper La Stampa, who said Mr. Berlusconi told him that he was not only stepping down, but that he would not run for office again.

In the end, it was not the sex scandals involving under-age girls, the corruption trials against him or even a loss of popular consensus that appeared to end Mr. Berlusconi’s 17-year domination of Italian political life. It was the pressure of world markets — which drove Italy’s borrowing costs to record highs this week — and the European Union, which could not risk his dragging down the euro and with it the world economy.

With fears that the debt crisis would spread from Greece to Italy, whose economy is too big to bail out, pressure had been building on Mr. Berlusconi to resign for weeks — from Europe and from within his center-right coalition. Even the Roman Catholic Church, which still cheap mlb jerseys plays a powerful role in Italian political life, has recently been harshly critical of the prime minister.

European leaders, who have long questioned Mr. Berlusconi’s commitment to economic changes, had become especially concerned in recent weeks that he no longer had enough control of his coalition to deliver on promises of crucial economic reforms and that in a crisis built in part on perception, Italy’s reputation was too closely linked to his own.

In a sign of the seriousness of the issue, a delegation from the European Commission was due in Rome on Wednesday to check on the country’s reform program, days after the International Monetary Fund said it would monitor Italy’s progress, a rare intrusion for an economy the size of Italy’s.

Mr. Berlusconi’s announcement came just days after Greece’s leader, nfl jerseys cheap Prime Minister George A. Papandreou, also overcome by financial troubles, agreed to resign in favor of a unity government.

The immediate trigger for Mr. Berlusconi’s decision was that a procedural vote in Parliament made it clear that he had lost his majority after defections from his coalition, and after losing the backing of a crucial ally, Umberto Bossi. Mr. Bossi, of the Northern League, had told him to step aside for the good of the country.

After the vote, a photographer’s zoom lens of caught Mr. Berlusconi jerseys wholesale writing “8 traitors” on a piece of paper on which he had also written “resignation.”

Hours later, he met with the president of Italy, Giorgio Napolitano, and said he would resign.

A statement issued by the president’s office after the meeting said that the prime minister had acknowledged “the implications of the result of the day’s vote in the lower house,” but at the same time had expressed “concerns” about the need to pass the urgent reforms requested by Italy’s “European partners.”

“Today’s vote reinforced my concerns about the moment that we are experiencing, a situation where the markets do not believe that we really want to introduce the liberalizing measures that Europe insistently asked us to carry out,” Mr. Berlusconi said in a telephone call to the state broadcaster RAI.

By linking his fortunes to the austerity package — whose contents have not yotoforum yet been made final — Mr. Berlusconi effectively blocked both the opposition and dissidents within his own party from bringing him down in a confidence vote over the measures.

His announcement, in a meeting with Mr. Napolitano, made the event seem almost anticlimactic, allowing Mr. Berlusconi to exit somewhat gracefully rather than the humiliation of seeing his government fall in Parliament.

“It was the last act of the government and the only act where the government will have the support of the opposition,” said Massimo Franco, a political commentator for the newspaper Corriere della Sera. “It’s a compromise that allows Berlusconi to buy some time before exiting the stage immediately and for the opposition to say that Berlusconi is falling.”

Indeed, after Mr. Berlusconi’s announcement, the center-left opposition cheap jerseys leader Pier Luigi Bersani called the prime minister’s decision a “turning point that we welcome with great satisfaction.”

To some, Mr. Berlusconi had quietly, if belatedly, followed the example of Prime Minister José Luis Rodriguez Zapatero of Spain, who stepped aside to allow for early elections, causing market pressure on Spain to relent. “We are doing what Spain did months ago,” Mr. Calabresi said. “If we’d done it sooner we would have avoided more trouble.”

On Tuesday, yields on 10-year Italian government bonds — the price demanded by investors to loan Italy money — approached 7 percent, the highest level since the adoption of the euro 10 years ago and close to levels that have required other euro zone countries to seek bailouts.

They remained steady after Mr. Berlusconi’s announcement, but stocks rallied in New York.

While the fundamentals of Italy’s economy are much stronger than those of Greece, the country has a public debt of 120 percent of its gross domestic product, the highest in the euro zone after Greece, and structural problems that have led to low growth.

“The problem in Italy is not primarily the real data,” Germany’s finance minister, Wolfgang Schaüble, said in Brussels on Tuesday. “The debt is high, the deficit is not — economic data are not that bad. The problem is a lack of trust from the financial markets and that of course is a realistic situation. And this trust has to be strengthened.”

Last summer, Italy pushed through two sets of austerity measures that financial markets deemed insufficient to bolster the country’s economy and make a dent in its huge public debt of 1.9 trillion euros, or about $2.6 trillion.

Last month, Mr. Berlusconi pledged to the European Union that he would approve a new round of restructuring, including the privatization of some state assets, the loosening of labor laws and a modest pension change, but his promises did little to quell market anxieties.

Mr. Berlusconi’s commitment to resign “is a piece of very good news,” said Thomas Klau, the director of the Paris office of the European Council on Foreign Relations. He said that Mr. Berlusconi’s style of leadership had become “a major factor in impairing Italy’s credibility and undermining confidence in the ability of the Italian government to restore public finances and engage in meaningful reform.”

But after the Parliament passes the austerity measures, it remains to be seen what new government would carry them out.

“The real problem is that in reality, the austerity bill is an empty box into which they have to put things that will be very unpopular,” said Mario Deaglio, a professor of economics at the University of Turin.

“I think that they will try to fill it with lemons, with minor measures,” he added, noting that over the years Italian governments have promised to sell off state assets in dozens of austerity packages “without ever selling a thing.”

There was no timetable affixed to Mr. Berlusconi’s resignation offer. Media reports said the austerity measures could be put to a vote as soon as next week.
http://valor.forum7.biz/t34-european-debt-crisis-as-berlusconis-last-stand
Mr. Berlusconi’s future could also be complicated by the court cases against him. The day he stops being prime minister, he risks losing legal immunity.

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