Italy awaits market reaction to Monti exit soon
Italy and the rest of Europe on Sunday anxiously awaited the reaction of financial markets to Premier Mario Monti's surprise decision to resign and set the stage for an early vote, as speculation abounded over whether he might dive into politics and challenge Silvio Berlusconi in the election.
Monti has been widely credited with restoring faith in the country's capacity to survive the eurozone debt crisis since he took over the helm of a non-elected "technocrat" government. But he told the Italian president Saturday it was impossible to continue to lead after Berlusconi's party, Parliament's largest, dropped its support and blamed his austerity measure for Italy's staying mired in recession.
"We'll see what the markets will do," President Giorgio Napolitano told reporters asking if he was worried about the repercussions of the political crisis, including how it would affect its credibility and financial ratings.
It was Napolitano who appointed Monti, an internationally respected economist, last year to replace Berlusconi, the three-time premier whose resistance to potentially unpopular austerity measures panicked financial markets and helped set Italy tottering toward a Greece-style debt crisis.
Monti told Napolitano he would step down as soon as Parliament passes a budget bill, likely within two weeks, setting the stage for elections as soon as February.
Monti's accomplishments at the helm of the nonpartisan government included steering through Parliament tough pension reform, higher sales taxes and a revived property tax. He nonetheless enjoys high popularity ratings.
Supporters have encouraged Monti to run for the premiership. Speculation about whether he would face off with Berlusconi and others has been rife in the media, and Italians were lamenting his early departure.
A video and song quickly put together by popular Italian comedian and TV host, Rosario Fiorello, made the rounds of the Internet. The video shows Sunday's newspaper headlines about Monti's decision to quit and Berlusconi's bid to return to power.
`'Let's do ourselves some harm, as only we know how to do" Fiorello sings in Italian as the camera pans the headlines. `'We're Italians. We like to suffer."
Once he resigns, Monti will have a freer hand to jump into politics, since he no longer needs to guarantee the nonpartisanship that had until this week assured him broad backing in Parliament.
But, he he smiled and said nothing when reporters came up to him after he left a Milan church with his wife where the couple attended Mass.
`'It's clear that he (Monti) feels free to decide. He's thinking about it, and many are pushing him to take a step" into politics, Corriere della Sera's editor, Ferruccio de Bortoli wrote.
He has been widely praised by economic analysts, central bankers and many European leaders.
`'Mario Monti's government has achieved great things in a short period of time - won back the confidence of investors, moved forward budget consolidation," Joerg Asmussen, a German member of the European Central Bank's executive board, was quoted as telling Germany's Bild daily.
A London-based analyst at UniCredit, Erik F. Nielsen, said in his weekly comments Sunday that he wasn't worried that Berlusconi was running again, but warned that `'you should expect some short-term market reactions."
Nielsen, the Italian bank's global chief economist, said there would probably be a sell-off in Italian assets Monday morning, followed by some pressure into Thursday's bond auction. But `'I am not seriously worried about the direction of policies in Italy - and if Monti were to take a clear stand in the election, I suspect that the rally could be back on before long."
Defying opinion polls that indicate Berlusconi's party's popularity has taken a dive, to under 15 percent, the media baron announced on Saturday that he was running to regain the premiership, shortly before Monti's own decision to step down was revealed by Napolitano.
Possibly banking on appealing to his populist base, Berlusconi has vowed to again abolish the property tax on primary residences that Monti quickly reinstated as part of revenue-building measures for state and local coffers. The tax had been abolished by Berlusconi as part of a campaign promise during his successful 2008 run for office.
Central banker Asmussen added a warning: "Whoever governs Italy, a founding nation of the EU, after the elections will have to continue this course with the same earnestness" that Monti employed.
AP reporter Geir Moulson contributed from Berlin.