(Published November 21st, 2011)
Italians last week took to the street in jubilation over the ouster of their former Prime Minister, Silvio Berlusconi. No doubt the vacuum and pitiable financial market situation this European country is left with during Berlusconi’s regime needs someone that is vast in economics and one who gathers political might; who can weather the storm. The person Italy has laid solace on is no one else but a technocrat and former European Commissioner, Mario Monti. He has since taken over from Berlusconi as Italy’s Prime Minister.
He accepted the monumental task penultimate Sunday and has expressed confidence that the nation can beat the crisis if its people pull together.
His selection came a day after Berlusconi reluctantly resigned as premier, bowing out after world markets pummelled Italy's borrowing ability, reflecting a loss of faith in the 75-year-old media mogul's leadership. Berlusconi quit after the Italian parliament approved new reform measures demanded by the European Union and central bank officials - but even those are not considered enough to right Italy's ailing economy.
Monti has the huge task to consolidate on Italy’s shaky financial markets amid fears that this eurozone’s third largest economy might default on its debt and follow the pattern of Ireland and Greece who had to seek international bailouts.
The fragile state of confidence on Italy’s financial market was exposed after its bond auction, and the release of figures showing industrial production slumped by 2% in the eurozone in September, raising the spectre of recession.
" Monti is perceived to be a positive change for the country," said Annalisa Piazza, rate strategist at Newedge.
"Cautiousness on the future developments in Italy is fully justified. Credibility has been lost and it will take a while for market participants to believe that the country is back on the right track."
Italy had to pay a euro-lifetime record yield of 6.3% to sell five-year bonds with investors wary of buying its debt until Monti can undertake profound economic reforms.
The first step in trying to pull Italy from the brink of economic disaster is for Monti to equip himself with a formidable cabinet. He has appointed himself as the minister of economy and finance, and has opted to select a relatively small cabinet. He has so far, as at yesterday, chosen a government of ex-bankers and technocrats, to prevent the country from being dragged deeper into the euro zone debt crisis. No politicians have been included in the new administration, which was announced yesterday and consists of distinguished but largely unknown academics and financial experts.
His background
Monti who was born March 19, 1943 in Varese .His father is an Argentinean of Italian descent, while his mother is of Italian descent.
He holds a degree in economics and management from Bocconi University, Milan. He completed graduate studies at Yale University, where he studied under James Tobin, the Nobel prize-winning economist.
He taught economics at the University of Turin from 1970 to 1985 before moving to Bocconi University, where he was its Rector from 1989 to 1994, and has been its President since 1994. He was also the President of SUERF (The European Money and Finance Forum) from 1982 to 1985.
His research has helped to create the 'Klein-Monti model', aimed at describing the behaviour of banks operating under monopoly circumstances.
Monti served as European Commissioner from 1995 to 2004. Under this capacity he was responsible for internal market, services, customs, taxation and competition.
He was also appointed a senator for life in the Italian senate on November 9, 2011.
He is a member of the Presiderium of the Friends of Europe, a leading European think tank, was the first chairman of Bruegel, an European think tank founded in 2005. He is the European Chairman of the Trilateral Commission, a think tank founded in 1973 by David Rockefeller. He is also a leading member of the Bilderberg Group.
Monti is an international adviser to Goldman Sachs and The Coca-Cola Company.
Berlusconi’s first government in 1994 appointed Monti to the European Commission. His appointment to the new European Commission was four years later, in 1999, confirmed by Massimo D’Alema’s government under the presidency of former Italian Prime Minister Romano Prodi. Thereafter he was responsible for Competition policy, where he initiated anti-monopoly proceedings against Microsoft.
He also led the investigation into the proposed merger between General Electric and Honeywell in 2001, which the European Commission blocked.
The second Berlusconi government did not confirm his appointment for a third time in 2004, instead proposing Rocco Buttiglione in his place. The Italian government had to replace Buttiglione with Franco Frattini when he was rejected by the European Parliament.
In 2007, Monti was one of the first supporters of the first European civic forum, Etats Généraux de l'Europe, initiated by European think tank EuropaNova and European Movement.
In December 2009, he became a member of the reflection group for the future of Europe, chaired by former Spanish Premier Felipe Gonzalez. In this forum, he advocated an economic government for Europe and a European Monetary fund. He also supported a New European Deal with a better coordination between social and economic issues in Europe.
In 2010, Monti was asked by Commission President Manuel Barroso to produce a "Report on the Future of the Single Market" proposing further measures towards the completion of the EU Single Market.
Can Monti rescue Italy?
Although, the 68-year-old economics professor is no pushover, as aforementioned, he has earned a reputation for staring down challenges as a tough EU competition commissioner, but he'll have to win a confidence vote in Parliament before he can lead the nation.
Monti told reporters he will carry out his task "with a great sense of responsibility and service toward this nation." Italy must heal its finances and resume growth because "we owe it to our children, to give them a concrete future of dignity and hope", NDTV reported
Berlusconi's party also demanded that only technocrats - not politicians - make up Monti's Cabinet in exchange for its crucial support.
He faces a daunting challenge - preventing an Italian default that could tear apart the 17-nation eurozone and send Europe and the U.S. into new recessions.
"There is an emergency, but we can overcome it with a common effort," Monti told the Italians, shortly after Italy's president formally asked him to see if he can muster enough political support to lead the country out of one of its most trying hours since World War II.
"In a moment of particular difficulty, Italy must win the challenge to bounce back, we must be an element of strength and not weakness in the European Union, of which we are founders," he added.
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