Mario Monti Is the New Prime Minister of Italy

Mario Monti

Italian President Giorgio Napoletano on Sunday appointed the economist Mario Monti, former European Union Competition Commissioner, to form a new government following the resignation of Silvio Berlusconi on Saturday night. Berlusconi stepped down after three terms in office, and economic policies that are said to have brought the country on the brink of disaster.

Monti, which is a respected economist, has been given the mandate to implement reforms that would safeguard Italy and would make sure the euro zone is reeling from the constant attacks it went through over the last few months.

His government has won pledges even from the conservatory party of Berlusconi to lead a technocratic government that would ensure the rescue from financial disaster. Monti said he would begin immediately to work toward that goal and assured the nation that economic disaster can be avoided.

The new prime minister pledged to work with responsibility and dedication for the country at a time when the entire European continent is in economic crisis, and the world is in turmoil. He also promised that Italy would become again an element of strength not of weakness in Europe, reminding that Italy is founder of the European Union and must play an important role in its development.

The task set before him may not be an easy one since he must prevent the economy of his country from reaching default. In doing so he will have to tackle the bitter problems the economy faces: low productivity, increased governmental payrolls, huge wage costs, excessive taxes and bureaucracy that actually chokes the economic development.

Italy is the third economy in the euro zone, which means that it is too large to bail out, so that it must find a way to save itself and consequently the entire European economy. With Italy fallen, it is expected that the entire euro zone would disband.

The country is dealing now with 1.9 trillion euros in debt, which is about 120 percent of the national domestic gross product. Much of the debt is due soon.

Monti was a Brussels bureaucrat and as such was a top trust-busting figure, which is expected to serve him in case he receives the parliamentary support. In order for him to do that, the members of the government must not be from the opposition, Berlusconi’s party warned.

Berlusconi and his party, Freedom People Party, announced they wanted snap election, and that they were not disposed to wait until 2013, when regular elections come.

In the meantime the European stocks went higher on Monday following both the resignation of the former Italian prime minister and the nomination of the new PM.

There are voices that say that in Italy democracy is put “on hold” and that the people must understand, and they do, that the labor market in Italy must be redesigned, so that the productivity in the economy be increased.

Italy is confronted to the coming of term of the 10-year bonds, and their surge to more than 7 percent threshold, a rate which made Greece, Portugal and Ireland to ask for European bailout.

Experts consider that though tough decisions must be taken, this would not impact on the people’s commitment to the European institutions. South Europe, they think, needs strong European institutions.