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ITALY:Will Berlusconi’s resignation save Italy from crisis?

Wednesday, November 9, 2011

Chernitsa Polina

Silvio Berlusconi. Photo: EPA  

Italy is another Greece, or even worse. The political crisis provoked by a split in the ruling coalition and statements of Prime Minister Silvio Berlusconi on his resignation, may trigger an uncontrolled collapse of the national economy.

Late Tuesday, the parliamentary vote on a key budget bill revealed lack of consensus in the ruling coalition. Berlusconi’s main opponent Pier Luigi Bersani announced that in the current situation the Prime Minister should resign immediately. Berlusconi replied that he would only resign after the government has approved the package of anti-crisis measures. According to Russia’s presidential aide Arkady Dvorkovich, Berlusconi is acting in the interests of his country and the EU:

“Berlusconi is doing his best to maintain a stability of the Italian economy and in doing so he is also helping the EU. Being the man of huge political will he is prepared to take serious political and personal steps to ensure the stability of the situation. The market requires concrete steps to prove that the situation will not get worse in the future. The Italian government has prepared such steps.”

Amid the current crisis Berlusconi’s steps seem to be quite grounded, political analyst Sergey Utkin says.  The package of anti-crisis measures has not been submitted to the parliament yet. Non of Berlusconi’s possible successors such as his party’s secretary Angelino Alfano or the former European Commissioner Mario Monti have enough political weight to form the majority and support the project, the expert stresses.

“Despite all the criticism there is no other leader in Italy who could be compared to Berlusconi. All the options which are now being considered are merely technical. The political struggle which starts after Berlusconi’s departure will take up a significant part of the resources, while the economic situation may continue to get worse.”

On the other hand, the experts note that it is a stalemate situation. Even if Berlusconi resigns and early elections are held, the new authorities will have to implement the plan on a radical reduction of the state debt. This is the recommendation of the EU which sounds increasingly like a directive day after day. Currently, Italy’s state debt amounts to almost 2 trillion euros (more than the debts of Greece, Portugal and Ireland put together) Italian state bonds set new negative records daily and the budget deficit equals 120% of the GDP.  An uncontrolled collapse of the Italian economy may bury all the EU’s hopes for an economic recovery, political analyst Andrei Suzdaltsev says.

“First of all, these problems will affect Germany because the economies of Italy and Germany are closely linked. Germany is the locomotive of the European economy. With great difficulty it can survive the Greek crisis but Italy’s crisis will make Europe look for new recipes to pull its economy out of the crisis.”

VOR.