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Berlusconi's party backs Monti to be new PM

Berlusconi's party backs Monti to be new PM

November 13th, 2011 by FRANCES D'EMILIO, Associated Press in News

ROME (AP) - Economist Mario Monti won crucial backing from Silvio Berlusconi's conservative party Sunday to try to put together a new government, but it demanded that he rule only long enough to implement urgent measures to rescue Italy from financial disaster.

President Giorgio Napolitano was widely expected to tap Monti later in the evening, in hopes he can quickly assemble technocrats like himself who will reassure the markets that Italy is serious about healing its finances and reviving its economy.

Berlusconi reluctantly resigned late Saturday, bowing out after world markets' pummeled his country's borrowing ability, reflecting their loss of faith in his economic program. Berlusconi quit shortly after the Italian parliament approved new reform measures demanded by the European Union and central bank officials.

Angelino Alfano, head of Berlusconi's conservative Freedom People party, said he told Napolitano that Monti has his party's "consensus" to try to form a government. "We have given our willingness to Professor Monti," Alfano said.

But whether Berlusconi's forces will give Monti crucial support in Parliament depends on who Monti choses for his Cabinet and what will be his government's priorities. Alfano stressed that no opposition members should be in the Cabinet.

"Our preference is for technocrats to join" the Cabinet, Alfano told reporters.

He also added another condition: A Monti government "cannot last longer" than the time needed to implement the economic reforms. Berlusconi and his supporters have made clear they want elections soon, not at their scheduled time of spring 2013.

As Alfano was speaking, a crowd of Berlusconi supporters cheered and applauded the outgoing premier as he got into a car at his private residence in Rome. That was in sharp contrast to Saturday night, when hundreds of Romans heckled and jeered Berlusconi and popped open bottles of sparking wine to toast his departure.

Whoever leads Italy faces a monumental task: an Italian default could tear apart the coalition of 17 countries that use the euro and wallop Europe and the U.S., which are trying to avoid new recessions.

Italy's economy is hampered by high wage costs, low productivity, fat government payrolls, excessive taxes, choking bureaucracy, and an educational system that produces one of the lowest levels of college graduates among rich countries.

In addition, as the third-largest economy in the eurozone, Italy is considered too big for Europe to bail out like it did Greece, Portugal and Ireland.

The next Italian government needs to push through even more painful reforms and austerity measures to deal with €1.9 trillion ($2.6 trillion) in debt - about 120 percent of the country's economic output. And many of those debts are coming due soon - Italy has to roll over more than €300 billion ($410 billion) of its debts next year alone.