Following prime minister Silvio Berlusconi‘s resignation on November 12, Italy swore in a technical government to better face the economic crisis gripping the eurozone and meet the anti-crisis criteria set by the European Union (EU). Italy’s new premier, Mario Monti, took office on November 16, just days after becoming a life senator in the Italian Senate. He presented his political agenda the next day, along with his new team of ministers.
An economist and professor, Monti appointed a 100 percent technocratic cabinet, with experts heading each of the ministries, and Monti himself heading the finance ministry. The other 17 are diplomats, private-sector leaders and government officials, among them, Renato Balduzzi, the new health minister, an expert on health-care law and chair of AGENAS, the regional health service agency; Admiral Giampaolo Di Paola, new minister of defence, who is chair of the NATO military committee and a former chief of defence staff; and three women, including Paola Severino, the new justice minister and the first woman to hold this role in the history of the Italian Republic. By naming no career politicians in the cabinet, Monti’s move is a clear one: unimpeded by fears about re-election, these experts can focus on the difficult and unpopular reforms that Italy so desperately needs.
As the international press has called it, the ‘Full Monti‘ government so far has widespread national and international support, and Monti says he hopes to lead the cabinet until the next scheduled elections in 2013. The Yale-educated economist says there is enough time to pass legislation that favours budget rigour, economic growth and fairness, the three ‘pillars’ of his agenda.
The first task of the new cabinet is to reduce the enormous costs of government, which have ballooned through a combination of the generous benefits and high pensions for national and local politicians, in addition to chronic overspending by local, provincial and national administrations.
As a result, the Monti government will cut 300,000 public-sector jobs by 2014. Monti has also called on local governments to privatize public services. In addition to these cost-cutting measures, Monti and his team will likely sell off the state’s real estate assets, many of which are in disuse.
While introducing an anti-tax evasion campaign, the new government is expected to put in place tax and pension reforms, among them reducing the current five income-tax brackets to three (20, 30 and 40 percent), thereby honouring the pledges Berlusconi made to the EU prior to his resignation. Monti may also revive a property tax on principal dwellings known as ICI, abolished by the Berlusconi government, which could generate an additional 3.5 billion euro in revenue.
Plans are the works to raise the retirement age to bring it in line with the EU, while at the same time introducing measures to discourage early retirement. Making the labour market more flexible to support greater employment of women and youth will need to be accompanied by welfare reforms to protect the unemployed, the new premier said.
In order to avoid a major recession triggered by the big spending cuts on the horizon, Monti must also encourage economic growth. Efforts to do so will likely include deregulating professional sectors to stimulate competition and providing incentives to venture-capital investments in small- and medium-sized companies.
Who is Mario Monti?
An Italian economist and academic, Mario Monti was born in Varese on March 19, 1943. He holds a degree in economics and management from Milan’s Bocconi University; he later completed graduate studies at Yale University.
Italy’s new premiere has served for an array of European Union institutions in his long and distinguished career. The most prestigious was his role as lead European Commissioner in international finance from 1995 to 2004; responsible for the Internal Market, Services, Customs and Taxation from 1995 to 1999 and then for Competition from 1999 to 2004.
However, he is perhaps best known for his role in blocking the proposed 2011 merger between U.S. firms Honeywell International and General Electric. He also faced U.S. multinational Microsoft in court, winning the case in 2004 when the court fuelled that Microsoft had broken EU competition law by having ‘abused its virtual monopoly power over the PC desktop in Europe.’ Monti has worked as an international advisor to other multinationals Goldman Sachs and The Coca-Cola Company.
He is a professor at Milan’s Bocconi University, where he was Rector from 1999 to 2011 and has been the university’s president since 1994. He was named Life Senator for in the Italian Senate on 9 November, 2011, just days before he was nominated to lead the current non-political government.
Monti is married and has two children. Calm and reserved, Monti’s demeanor is far from that of his flamboyant predecessor, Silvio Berlusconi.
