Monti Resigns, But Could Head a Government of Centrists

Prime Minister Mario Monti, who took office in 2011, resigned Friday after the passage of the 2013 budget and dissolution of Praliment by President Giorgio Napolitano, as the Premier had promised.  Meanwhile, Monti remains in office as caretaker premier. 

Although not officially declaring himself in the field as a candidate for premier in the parliamentary elections February 24, Monti offered an agenda for centrist parties who would invite him to head the next government, although he would not technically stand for election because he is not eligible as a Senator for Life.  The former European Commissioner had been appointed life Senator by Napolitano in order to be eligible to form a technocratic government after Prime Minister Silvio Berlusconi resigned during the fiscal crisis.

Monti’s pro-Europe plan includes a continuation and strengthening of his austerity program, which combines spending cuts with increased taxes, as well as additional labor reform.  The labor reform for which he had won parliamentary approval had been diluted.  Monti’s lists electoral reform as parliament’s priority.  Other planks in the professor’s platform include cracking down further on tax evasion and political corruption and eliminating conflicts of interest.  The unelected Prime Minister also proposes a dramatic reduction in public funding of political parties and caucuses, as well as campaign contribution limits. 

The Italian news agency ANSA reports that a centrist coalition of major Italian figures endorses Monti’s agenda.  Currently, the center-left leads in the polls, followed by Berlusconi’s center-right and a populist movement.  No party is close to a majority, however, which would necessitate a coalition, as usual.

Monti was successful in restoring market and European confidence in Italy by cutting spending and pension reforms that reduced Italy’s borrowing costs through lower interest rates, but his tax increases have harmed the economy.  Italy’s resultant slow growth has delayed the balancing of the budget from 2013 to possibly 2014 through decreased tax revenues.  Although the austerity measures have been unpopular, Italians have generally accepted them as necessary, albeit begrudgingly.  

As I have noted previously, Italy, as the eighth largest economy in the world, is recognized as the European Monetary Union’s firewall against fiscal contagion from the Union’s weak periphery, and thus, as a bulwark against further European and global economic decline.