Italy's Government Criticizes Debt Crisis Response

Italy's new Prime Minister Mario Monti has chosen a government and is hoping to win votes of confidence in it from both houses of Parliament. Despite his best efforts to forge ahead, investors remain skeptical. Monti also said he hopes Italy can contribute to the changes being made to the European financial system.

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Italy's new prime minister has pledged far-reaching reforms. An economist himself, Mario Monti has managed to win a vote of confidence for his new national unity government by an overwhelming majority in Italy's senate. Still, Europe's debt crisis is gathering more steam and now pushing borrowing costs for Spain and France sharply higher. As NPR's Sylvia Poggioli reports, pressure is mounting on the European Central Bank to act to stem the crisis.

(SOUNDBITE OF PROTEST)

SYLVIA POGGIOLI, BYLINE: Students throughout Italy timed their latest demonstrations just as the senate was convening to vote on the new government.

UNIDENTIFIED MAN: (Italian spoken)

POGGIOLI: This is a warning, a young man said, that it's not enough to change ministers. We need radical change. But inside the senate, the first impression was a radical break with the past. The Monti cabinet lineup is a far cry from the previous one of Silvio Berlusconi. No more former showgirls and former employees of the media tycoon. The new ministers are academics, technocrats and experts in their various fields. Prime Minister Monti told the senate the European project cannot survive if the monetary union fails.

PRIME MINISTER MARIO MONTI: (Through translator) The end of the euro would unravel the single market - its rules, its institutions - and would take us back to where we were in the 1950s.

POGGIOLI: The pillars of what Monti called a government of national commitment are fiscal rigor, economic growth and social equity. He announced an overhaul of the pension system, a crackdown on tax evasion, which represents 17 percent of Italy's GDP, labor market reform, and an all-out crackdown on organized crime. And in the country with Europe's highest youth and female jobless rates, a key point of the Monti program will be greater access to the workplace for young people and women, whom he called the great wasted resources of the country. Turning to the eurozone crisis, Monti had a veiled criticism of how it was handled.

MONTI: (through translator) Only if we can avoid being seen as the weak link of Europe can we contribute to European reforms.

POGGIOLI: Otherwise, Monti added, Italy could end up in a community whose rules reflect the national interests of other countries. And in a direct jab at northern Europeans, he said let's stop demonizing countries and repeat again that this crisis is international.

MONTI: (Through translator) It's not a case of them on one side and us on the other. We are Europe.

POGGIOLI: For some time, the eurozone crisis was limited to the periphery - Greece, Portugal and Ireland. Then in the last two weeks, like a lit fuse it sped first from Athens to Rome, then to Madrid and now Paris. Yesterday, the Spanish government paid its highest borrowing rate since 1997. With France's AAA credit rating under threat, fears are mounting that the debt crisis is sucking in Europe's second-largest economy. French President Nicholas Sarkozy has long urged stronger action by the European Central Bank, and yesterday Spanish Prime Minister Jose Luis Zapatero said the ECB must intervene to solve the crisis. This is why we transferred power, he said bluntly, adding that it must be the bank that defends the common policy and its countries. This was only the latest criticism of German insistence that the central bank's role is to fight inflation. And now with European Union officials forecasting that the entire eurozone is slipping into recession, they hope this will finally prompt a change of heart by the German government. Sylvia Poggioli, NPR News, Rome.

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