When signor Mario Monti accepted the task of heading up a technical government to tackle Italy's economic crisis, he committed to resigning when the emergency measures were completed and the situation stabilised (BBC, 2012). While it may be a bit early to tell whether Italy's economy has been successfully stabilised, Sig. Monti has kept his word and resigned, meaning that democratic elections are imminent in Italy, with voting taking place on the 24th and 25th of February.
This is serious news for Europe - and affects all; whether they are in the European Union, the Eurozone, or not.
First of all it means that the debate is back on as to how we solve the economic crisis. We have seen conservatives, backing cuts to public spending, sweep European elections since the economic crisis set in. Yet in the past year, social democrats backing more measured responses have found some success: the Democrats retained the US presidency (Cavna, 2012) and the Socialists found success in the French elections (Chrisafis, 2012). Italy presents an interesting marker; will the conservative trend continue, or will the specific rejection of cuts by the French electorate signal a general change in the wind?
The second issue, is how this decision will affect attempts to tackle both Italy's, and Europe's, debt and deficit. Italy's debts are a significant contributor to Europe's ongoing financial troubles. Its debts, as of 2011, were the second highest contributor to the general total of European debt, and were the second highest debts as a percentage of GDP in the EU, at 126% (Rogers & Wearden, 2012; Eurostat, 2012).
Sig. Monti was appointed by President Giorgio Napolitano to arrest control of the situation when the government of former Premier Silvio Berlusconi resigned with the country mired in financial crisis, and Sig. Berlusconi himself facing a number of personal accusations (BBC, 2011). Sig. Monti and his government did manage to get control of the situation - at least to a degree.
Italy's borrowing costs were brought under control, and the laborious process of structural reforms began, aimed at reducing the weight of government spending (Reuben, 2012). However, much was left undone when the passage of a budget was followed by the largest party in the Italian Parliament, Sig. Berlusconi's own 'Il Popolo della Liberta', refusing to give further support (BBC, 2012).
With the economic situation beginning to calm in Italy, the announcement of an election is causing a few concerns (Traynor & Hooper, 2012). And those fears have not been eased by Sig. Berlusconi's announcement that he is running for Premier once more - he has already been accused of being irresponsible for offering tax cuts described as 'dangerous electoral propaganda' (Davies, 2013).
Sig. Monti's most important contribution as Premier has been described as restoring Italy's international credibility (The Economist, 2012) - and now the belief is that an elected government has to be found to take the next step. And whichever candidate the Italian electorate back, they will have a profound impact on the people of Europe.
The election of a credible candidate, with a real and demonstrable plan to resolve Italy's economic woes, will benefit every country that trades with Europe. The stability offered by a solid, clear response will calm the fears of lenders and investors, and provide a much needed boost to market confidence - something that is sorely needed to encourage small businesses and employers to take on or retain staff.
But, and just as important, it is imperative that a credible candidate appears that can recover the confidence of the electorate and offer a response. Not just for Italy, but for Europe and its trading partners, that response has to overcome the symptoms of the economic crisis - high unemployment and struggling welfare systems. The credible candidate needs a plan that ensures the cost of economic recovery is not a human one.
But, and just as important, it is imperative that a credible candidate appears that can recover the confidence of the electorate and offer a response. Not just for Italy, but for Europe and its trading partners, that response has to overcome the symptoms of the economic crisis - high unemployment and struggling welfare systems. The credible candidate needs a plan that ensures the cost of economic recovery is not a human one.
==========
References:
==========
+ BBC's 'Italy's Mario Monti resigns, as MPs pass budget'; 21 December 2012.
+ Michael Cavna's '"OBAMA WINS" CARTOONS: Artists draw upon the heat of the election'; The Washington Post; 7 November 2012.
+ Angelique Chrisafis' 'François Hollande wins French presidential election'; in The Guardian; 6 May 2012.
+ Simon Rogers & Graeme Wearden's 'Europe government's debts: how much do they owe?'; in The Guardian; 6 February 2012.
+ Eurostat's 'Second quarter of 2012 compared with first quarter of 2012, Euro area government debt up to 90.0% of GDP, EU27 debt up to 84.9%'; 24 October 2012.
+ BBC's 'Italy crisis: Silvio Berlusconi resigns as PM'; 13 November 2011.
+ Anthony Reuben's 'Has Mario Monti done a good job?'; on the BBC; 21 December 2012.
+ John Hooper & Ian Traynor's 'Monti resignation announcement causes fears of renewed euro turbulence'; in The Guardian; 10 December 2012.
+ Lizzy Davies' 'Silvio Berlusconi accused of "dangerous propaganda" over Italy tax cut vow'; in The Guardian; 3 February 2013.
+ The Economist's 'Monti's medicine'; 8 December 2012.
No comments:
Post a Comment