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European leaders managed to end the last yet ‘crucial’ meeting for the future of the monetary union with controversial outcomes. One of the most interesting, as the Economist of London has recently pointed out, regards the high stakes put on the table by the Italian Prime Minister, Mario Monti. Compared to fellow European leaders, Mr. Monti finds himself at a decisive crossroads: on the one side, the efforts to save the Euro and European credibility are proving slower and less resolutive than thought; on the other, Super Mario for the first time since he took office is seriously under threat at home.
Mario Monti has marked an interesting turning point for the fate of a European Union in moments of deep crisis. Appointed Prime Minister after Silvio Berlusconi, whose fatalistic approach and unclear choices had brought Italy to the brink of bankrupcy, Mr. Monti represents what most commentators and economists mean when talking about an expert and committed politician. Never a politician in strict terms, Mario Monti is a serious and very respected economist and scholar, Honorary President of the Bocconi University in Milan and former advisor at Goldman Sachs. He served as European Commissioner for several years, both in the Santer and in the Prodi Commission, and he has linked his name to the trade and competition battle against Microsoft that peaked in the astronomical fine prescribed by the European authorities to the computer giant for abuse of dominant position and violation of free market competition rules.
Super Mario, a nickname that explains a lot of his character, came into power at a decisive moment for the destiny of the Italy. Caught by long years of low-growth rates, Italy had been put under fire by the financial markets, and high bets on its interest debt rate were bringing the country to the limit of insolvency. The Italian Prime Minister at the time was Mr. Silvio Berlusconi, a well know media tycoon who had ruled the country for most of the previous decade, who was taking lightly a situation that was rapidly becoming grave. He had found himself unable to recognise the gravity of the moment, postponing serious reforms and solutions that would have relieved the market’s pressure on the country, and destabilising even more the situation by being involved in an atrocious scandal of underage prostitution. Moreover, the image of Italy on the European and international stages had been highly diminished during his term. On the one side, Silvio Berlusconi’s attitude towards the European allies had proved vague, to a point where he was not even invited to important meetings, on the other the Prime Minister’s choices in foreign policy had lacked decisiveness, in particular with respect to the recent North African revolution and the Libyan crisis, leaving Italy rather isolated in the face of the crisis.
On a night in October, under attack by many sides and with a growing pressure mounting by the European Central Bank and influential European leaders, Mr Berlusconi resigned. Few hours later, Mr Monti looked like being the right man at the perfect moment. Since his first press conference, he looked like a creature completely different from his predecessor. In the space of few days, he had managed to group with European leaders and to fly to the United States, clearing at once the dark skies that were gathering over Italy. Mario Monti’s internal and external tactics proved immediately winning strategies, and he was able to lead and form consent around him on European matters like no one had been able to do in the previous months. Given the fact that he was a convinced defender of austerity and spending reductions, it looked like Europe had found a new respected voice. Moreover, the United States sided with PM Monti since his first visit overseas, and President Obama seemed glad to be able to talk to someone who saw things in the same way.
Sustained internally by a transversal coalition of parties, Prime Minister Monti started to put in place quickly a series of reforms that have changed the Italian market and labour laws to reduce spending and to put a break on the galopping foreign debt. In few months, the results look impressive for the slow-changing Italy, but the impact on the pockets and spending power of consumers has been hard and difficult to manage, in a country where average salaries are lower than the European standard, and where the private sector is still plunged into recession. Commentators and public opinion, who at first supported Monti’s cabinet with no reserves, have started to think that most of the solutions are useful to recover the banking and financial sector, whereas they look like depressing, rather than sustaining, the real economy.
At the European level, Mr. Monti worked hard to form a coalition of countries that could think out of the box of the German supremacy in economy, trying to create a consensus over a new role to be given to the ECB and to European institutions, to face the crisis in coordination, therefore assigning force to the decisions taken. On the one hand, Monti has rebuilt the diplomatic and international respectability of Italy, but on the other hand it has not reached the expected results. That is why, considering the weak achievements he managed to reach in the last two meetings, a careful picture can be drawn so far. Commentators highlight that the hard work Monti lacks the momentum it needed. He has not provided Europe with decisive rules that could avoid market turmoils and that would strongly respond to financial speculations on the European banking system, and at the same time he has not been able to bring leaders to foresee an adequate solution to a single-currency market unrest that looks on the brink of disrupture in the face of the Greek crisis.
Moreover, internally he has everything to lose. On the one hand, trade and consumer unions are fighting to avoid the application of even stricter measures that would, they argue, bring the Italian middle class on its knees. On the other hand, it has provided Italian parties with the perfect arguments to break the coalition that supports the government, and even allow the unthinkable. In the past days, Silvio Berlusconi has reappeared on the scene criticising Monti’s cabinet, with the explicit intention of a spectacular comeback on the political stage. Monti’s fragile consensus is at a nexus, and it has yet to be seen whether it could reach any of the planned objectives, being it internal or European, even though it looked like being the right person many would bet on to reach them.
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