Italy's Monti gears up for key week of debt talks

November 21, 2011 - 3:35 PM
Italy Financial Crisis

Italian Premier Mario Monti delivers his speech at the lower chamber in Rome, Friday, Nov. 18, 2011. Italy's lower chamber of parliament has begun deliberations ahead of a confidence vote for the government formed by Premier Mario Monti aimed at saving Italy from its debt crisis. (AP Photo/Gregorio Borgia)

ROME (AP) — Italian Premier Mario Monti began on Monday what promises to be a whirlwind first week in office with a phone call with President Barack Obama and his first Cabinet meeting, during which he pledged speedy new measures to combat the country's debt crisis.

Monti's inaugural week will continue with meetings with key European officials to map out a strategy for combatting the debt crisis.

During a "cordial" phone call, Obama said he hoped to meet Monti soon and asked the premier to remain in close contact on the financial crisis and international issues, noting they both have forces in Libya, Afghanistan, Lebanon and Kosovo, Monti's office said in a statement. "President Obama expressed his full confidence in the premier, also in light of his recognized experience on the European and international stage, as well as the high competence of the members of the new government," the statement said.

Earlier Monday, during his first formal meeting with his ministers, Monti outlined the agenda and possible approaches to find efficient measures "to ensure the stability of the euro," according to a separate statement, which didn't provide details. He also briefed the ministers — all experts including bankers, professors and business executives without previous governmental experience — on procedures to agree "in the shortest possible period" on specific measures to present to Parliament.

The ministers approved a decree concerning the administrative functions of the capital Rome, as well as extending states of emergency for areas hit by recent flooding and measures to deal with an influx of illegal migrants.

Monti has pledged to reform the pension system, re-impose a tax on homes annulled by Berlusconi's government, fight tax evasion, streamline civil court proceedings, get more women and youths into the work force, and cut political costs.

While the deeper reforms will take more time, Monti has said the government would decide new austerity measures to address the crisis "in the coming weeks."

On Tuesday, Monti heads to Brussels for a first meeting with European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy. On Thursday he is due to join German Chancellor Angela Merkel and French President Nicholas Sarkozy in Strasbourg for what Monti has said will be a permanent club of the eurozone's three largest economies to confront the debt crisis.

Monti is under enormous pressure to boost Italy's stagnant growth and bring down high debt, which at 120 percent of GDP is among the highest in the eurozone. This is not only to save Italy from succumbing to the debt crisis but to prevent a catastrophic disintegration of the common euro currency.

Monti was tapped last week to lead the country after Italy's spiraling financial crisis brought down media mogul Silvio Berlusconi's 3 1/2 year-old government. Monti's government of professors, bankers and business executives won back-to-back confidence votes in Parliament.

Yet debt worries continued to stalk the eurozone Monday, with Italy's 10-year bond yield up 0.09 percentage points at 6.64 percent while stocks were down 4.5 percent on the Milan stock index.

Europe has already bailed out three small countries — Greece, Ireland and Portugal — but the Italian economy, the third-largest in the 17-nation eurozone, is too big for Europe to rescue.

The European Central Bank has been buying up Italian government bonds in a bid to keep borrowing rates down. The ECB said Monday its purchases picked up last week to nearly euro8 billion ($10.8 billion), up from euro4.48 billion the previous week. The ECB doesn't break down what countries' bonds it buys, but traders say it focuses on Italy to keep the country's markets stable.