Italy’s leading politicians acknowledge major reforms are needed to calm the markets and break the country out of a debt death spiral.
The parliament has just passed austerity measures linked to last year’s budget, but as yet there is no formal legislation written down for slashing spending, raising revenue and boosting growth in the future.
There are proposals which could be tacked on as an amendment to the existing spending bill.
They include making Italians retire later, privatising state companies, speeding up asset sales of as much as 60 billion euros and reforming employment law, including opening up so called “closed professions”
Inspectors from the EU, European Central Bank and the International Monetary fund are already in Italy to make sure that Rome implements the budget cuts already agreed to.
The inspectors’ paymasters back in Brussels, Frankfurt and Washington would like to see more from whoever replaces Berlusconi.
Spinola – “Italy reacts well when in deep trouble”
Italy’s prime minister says he is ready to resign only after the vote on the new austerity plan. Euronews spoke to journalist and political analyst Luigi Spinola to ask him how realistic is it to approve the measures required by the EU and ECB in such a short time?
“The solution agreed on Tuesday by President Napolitano is based on a quite strict calendar. Technically it would require two weeks, or till the end of the month. From a political point of view, it’s clear that the opposition wants to speed up this timetable in order to end the Berlusconi era. At the same time, the opposition knows very well that Berlusconi’s main political and strategic goal might be to quit as late as he can, to avoid a temporary government and go for an early election. The point is that this is the typical mood of Italian politics, but now the Italian agenda is receiving input from outside the country, partly from Europe and, indeed, from the markets. I think that the markets might have a kind of accelerating effect, the growing pressure of the markets could accelerate this process,” says Spinola.
euronews: “Does Italy have enough time to implement such a tough reform plan?”
“Yes, because this plan is not really imposed by Europe or the markets. These are very well known reforms that Italian politicians were already expected to implement over the last 20 years. As this country always reacts well when it is in deep trouble I think that it will succeed. Italy has a solid basis, it’s the EU’s third biggest economy. So my only warning is to avoid political competition to influence the implementation of this reform plan.”
euronews: “We see the Italian financial markets getting more and more nervy. Could the financial situation spiral out of control?”
“The risk exists. The Italian crisis is more or less influenced, hour by hour, by financial market trends and the growing spread between German and Italian bonds. But I do believe that it’s still possible to approve this package of reforms and, later on, to improve it.”
Italy’s president will decide on the “after Berlusconi”. What option would reassure the markets? Early elections? A national unity government? Or a temporary, technocrat administration?
“The best option for the Italian Presidency and Brussels as well seems to be a wide coalition government, maybe headed by a leading figure like Mario Monti, able to implement reforms. I don’t know if the Italian context will allow this scenario.”
euronews: “To conclude, is this the final chapter of the Berlusconi era, or just the end of his career as prime minister?”
“The point is that Berlusconi in these last 20 years was not only the leader of the main centre, but he was the only party’ shareholder. Any other potential leaders or talented figures have been put aside. If there is a conflict over Berlusconi’s choice for the next People of Freedom party leader, this might accelerate changes at the top.”