Berlusconi Resigns as Monti Prepares New Italian Government
Prime Minister Silvio Berlusconi resigned, paving the way for former European Union Competition Commissioner Mario Monti to form a government that can protect Italy from being overwhelmed by the region’s debt crisis.
Berlusconi presented his resignation to President Giorgio Napolitano after the parliament in Rome gave final approval to a plan to spur growth and tame the region’s second-biggest debt. Napolitano will consult with political parties tomorrow to seek support for Monti, 68, before offering him the post.
Berlusconi, 75, said on Nov. 8 that he would resign as soon as the budget measures were passed. Defections had left him without a majority in parliament, and Italy’s 10-year bond yield had surged to more than 7 percent, the level that prompted Greece, Ireland and Portugal to seek EU bailouts. His defense of charges that include bribery and paying for sex with a minor sapped his popularity at home and undercut his support abroad.
“We cannot imagine that without Berlusconi our problems are solved, but without Berlusconi we can start working on how to solve the problem,” Rocco Buttiglione, a member of the Union of Centrists, and a member of Berlusconi’s previous government, said today in Rome.
Italy’s 10-year bond yield jumped to a euro-era record 7.48 percent on Nov. 9, hours after Berlusconi’s government unraveled, driving the yield difference with German bonds to 575 basis points, more than twice the average for the year. Italy was forced to pay 6.087 percent on one-year bills at an auction on Nov. 10, the most in more than 14 years.
As support for a Monti government built, yields narrowed more than 100 basis points on the final two trading days of the week, and the FTSE MIB stock index closed up 3.7 percent, on Nov. 11, the biggest gain of any European benchmark.
Berlusconi has dominated Italian politics for almost two decades and is Italy’s longest serving prime minister since the Second World War. He won three elections and governed for more than half the 17 years since he entered politics in 1994.
Thousands of Italians gathered outside the presidential palace to witness Berlusconi’s final minutes in office. Many yelled “buffoon, buffoon” as he drove to the president’s residence. Celebrations broke out, with people waving Italian flags and dancing in a conga line upon his departure.
Berlusconi’s fall comes one day after Greek Prime Minister George Papandreou resigned to force a coalition government with broader support to implement austerity measures. The changes of governments in Italy and Greece were “positive,” U.S. President Barack Obama said in Honolulu today.
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