Freitag, 11. November 2011

Don't worry: Monti will save Italy!

As I explained this morning, in Italy the road seems 95% cleared for the formation of a new government under the leadership of Mario Monti, a highly respected academic and economist, who held in two different administrations in Brussels the post of a European commsissioner, first for the Internal Market than for Competition. I see three main reasons, why Monti will save Italy in the next couple of months.
1. Monti is the right man at the right time.
2. He will create a very broad majority in the parliament - a kind of "Great Coalition" - which will provide to the Prime Minister an incredible amount of power, maybe more than any of his ca. 60  predecessors. 
3. He will form a cabinet, that will include the best people. They will come from the two main political sides but there will be also tecnocrats, academics and leaders from respected institutions like the Bank of Italy on board.

Ad 1. Monti is the right man, because he is very smart. He has highest tecnical and ethical standards. He has an incredibly strong and courageous personality - remember his storical fight against Microsoft, that ended with the record fine of 497 Mill Euro and a real victory for the EU. He is visionary and bold. But he is also a affable person, listens very well and is a very good team player. Last but not least he is in the international elite one of the most respected men. He is the best face that Italy has at it's disposal to improve very quickly the terribly damaged image of the country, that has reached in the last weeks scary levels. Nobody here would have ever imagined that Italy would be one day compared to Greece and therefore with the weakest member of the European Union. A shame and a slap in the face for this proud country - founding member of the European Community - that is not only incredibly rich in terms of culture and natural beauties, but also in terms of entrepreneurial spirit, creativity, inventiveness and sense for quality - think about the excellent food and the unicque wines, think of the luxury companies like Armani, Zegna, Versace, Loro Piana...
So Monti will be very quickly very visible on the international stage and I'm sure that he will faster, than many think today, let forget the disastrous past for the country, that Berlusconi with his unacceptable behaviors has been responsible for. In a certain sense is Mario Monti the perfect contrary to Silvio Berlusconi. The world will understand that Berlusconi was not the norm. He didn't represent the Italian-way to be and to do, but he was the exception. And the world will understand that Italy luckily has at it's disposal a broad group of classy people, internationally educated and open minded.

Ad 2. Monday Monti will start working. He will explore the situation on both sides of the political spectrum, in the People of Freedom (PDL) - the Berlusconi movement and the Democratic Party (PD), the left-of the-center party led by the reasonable Pier Luigi Bersani, a former communist, who has turned to a Social Democrat.
The mainstream of the parliamentarians in the Berlusconi party will happily support Monti, because of the alternative scenario, that would prove desastrous: early elections before Christmas. Be sure, that in the aftermath of the utterly flawed crises-management the PDL would suffer a storical defeat. So, the longer Monti stays, the better he can make forget the past, which is in the interest of the PDL leaders. At least today. Elections should be however hold when Monti will have done the bulk of work, expect in March, maybe April.
On the other side of the political arena dominates the word "responsibility for the country". Even if early elections could lead with a high probability to a relative majority of the PD, which could then form a coalition government together with some smaller parties - some on the left side of the spectrum as well as the catholic UDC of the handsome and smart Pier Ferdinando Casini. To be clear: PD-boss Bersani would have a good chance to become Prime Minister in only a few weeks, a dream for every homo politicus. But he shows an admirable attitude, that Berlusconi never had, to put the countries interests before his one. Chapeau! That means: the mainstream of the PD under Bersani will support Monti.
The only party with a significant size, which will not follow the new government will be the regionalist, sometimes secessionist Lega Nord of Umberto Bossi. The long-time ally of Silvio Berlusconi will go happily in the opposition to sharp the profile of his party for the elections 2012 after the desastrous months passed on the benches of the government.

Ad 3. The first rumors of the names for the new governments are very encouraging: 
(a) Gianni Letta, who was crucial during the long tenure of Berlusconi, that the Prime Minister behaved in a constitutional way avoiding even more desasters, should stay as Deputy Prime Minister, covering de facto the role of Chief-of-Staff for Monti. He is a first class civil servant with enormous experience (he is 76)  and he is also a feel-good-factor for Berlusconi, who apparently linked the future of Letta with his dispomibility to resign in reasonable terms. 
(b) The current minister of justice, Nitto Palma, more a legal technician than a real politician should stay as well or should be at least be substituted by a "neutral tecnician". This is also crucial for Berlusconi, because he is obsessed to be persecuted by the justice system. Berlusconi wants to sleep well. And - frankly speaking - I can understand that. 
(c) As successor of Giulio Tremonti at the finance-ministery could arrive Fabrizio Saccomanni, currently General Director of Banca d'Italia, who seemed for some weeks as most likely successor of Mario Draghi as Central Bank Governor. This government department will however change quite strongly his character, because much of the power for economic and financial will be executed in the future by Prime Minister Monti himself. It seemed sometimes in the cabinet of Berlusconi, that Tremonti had more power than his boss.
(d) At the foreign ministery should arrive with Giuliano Amato another member of the meritocratic elite Italy's. He is as former prime minister and multiple minister in different functions; very strong connected internationally. He knows everybody, who counts, and he has the characteristic, that I would call "gravitas" - i.e. seriousness, a natural authority and competence. I was lucky to interview him at the very beginning of my mandate for Handelsblatt, when I arrived 11 years ago as correspondent for Italy.. He was in these times caretaker Prime Minister and he impressed me due to his affable personality and his sharp intelligence.
(e) From the PD side could play a leading roles the expert for social affairs Pietro Ichino as Minister for Welfare and 
(f) Enrico Letta, who was once with 33 the youngest ever Minister in Italy. At the beginning of his 40ies he is still young and could become Deputy Prime Minister in the more political role.
(g) From the catholic UDC will be also included someone, most likely Rocco Buttoglione.

Bottom line: Monti will form a lean and diversified cabinet, which has the perfect mix of politicians of the different parties, that support the government in the Parliament - younger and more experienced -  and technocrats. This government will be highly operative and active. It will move Italy on. If the world doesn't give credit to such a project I do not understand anymore anything! 
Two words to the financial impact: I'm sure that the spread between German Bunds and Italian T-bills should quickly go down from than 500 basis points to 350 maybe. Later this year they could even come down further, if the reforms are well designed. It will be for sure a much more sustainable level than today. The country will be able to refinance itself over the markets in 2012 and will not anymore be forced to be helped out by the bond purchases of the ECB. Italy will prove, that it is not Greece.
Although I'm half Italian, although I live for a long time here, one thing is totally unclear to me: why needs this crazy country always (as in 1992) terrifying crises to move on finally? Crazy country, really!


  1. Indeed! It's good to get some compact information about this significant cambio. Here I'm usually not properly updated, but well, now I am! Grazie Marcello - I'm thinking of you and the family...