Wednesday, November 09, 2011

Looming Crisis in Italy

Italy crisis deepens despite Berlusconi quit pledge
reported by Associated Press

Italian Premier Silvio Berlusconi confirmed he won't run again for office and said Wednesday his hand-picked successor Angelino Alfano will be his party's candidate when Italy holds new elections.

Despite his pledge to leave office, the country's benchmark 10-year borrowing rate jumped above the 7 percent level that is widely considered unsustainable over the longer term.

It was hoped Berlusconi's decision would restore confidence in Italy's economy by allowing the passage of painful austerity measures.


The 7 percent threshold is psychologically important for traders because Greece, Ireland and Portugal asked for bailouts when it became clear the rate wasn't coming back down from that level.


Berlusconi wants new elections with his hand-picked successor as a candidate. Before that can happen, Italy's president must decide an interim government and if it will be led by politicians or technocrats.

Berlusconi said he would step aside once parliament passes economic reforms demanded by the European Union to prevent Italy from being swept up further into Europe's debt crisis.


Once Berlusconi resigns, President Giorgio Napolitano must begin consultations to form a new government — possibly with the conservative leader from Berlusconi's party, or if consensus can't be reached, a technical government may be sought.

Berlusconi is pressing for new elections in early 2012.

"I won't run, actually I feel liberated," Berlusconi was quoted as telling the La Stampa daily. "It's Alfano's turn."

Berlusconi tapped Alfano, his former justice minister, to head his People of Liberties Party a few months ago.

At 41, Alfano represents a new generation of politicians after 17 years of Berlusconi leadership.

Mario Monti, a former EU competition commissioner who now heads Milan's prestigious Bocconi University, has been widely tipped as a candidate to head a technical government.

Berlusconi conceded it was up to Napolitano to decide how to proceed once he steps down.

It's not clear that Napolitano would want to subject Italy to elections any time soon given the need to calm markets. He may try to sound out politicians about the possibility of forming either a government of technocrats or a broad-based government that could hold a majority in parliament.

Posted to the list by:

Dave Welsh
Unidroit-L Listowner Unidroit-L


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