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Italy gets new Cabinet as Greek lawmakers endorse new leader

Italy's Mario Monti and Greece's Lucas Papademos are unelected technocrats tasked with bringing down staggering levels of government debt and restoring investor confidence in their battered economies.

November 17, 2011|By Henry Chu and Anthee Carassava, Los Angeles Times
  • Greek Prime Minister Lucas Papademos, right, speaks with Finance Minister Evangelos Venizelos in Parliament in Athens. Technocrat Papademos won a vote of confidence from 255 lawmakers in the 300-seat body.
Greek Prime Minister Lucas Papademos, right, speaks with Finance Minister… (Aris Messinis / AFP/Getty…)

Reporting from London and Athens — Italy swore in a new Cabinet and Greece's recently anointed prime minister won an important vote of confidence as both countries scrambled Wednesday to avoid an economic disaster that could torpedo the Eurozone.

The two nations are pinning their hopes on unelected, technocratic leaders tasked with bringing down staggering levels of government debt and restoring investor confidence in their badly battered economies. Failure by either country could spell doom for the euro, the currency they share with 15 other European nations.

In a solemn ceremony in Rome, former European Union official Mario Monti, a trained economist, took the oath of office as prime minister, alongside the team he has assembled to help him rescue the Eurozone's third-largest economy. Italy's new Cabinet includes financiers, diplomats and business leaders, but not a single elected politician.

The government takes over from that of former Prime Minister Silvio Berlusconi, the flamboyant, scandal- and gaffe-prone leader who resigned last weekend after losing credibility with the financial markets that have pushed Italy's borrowing costs to punitive levels.

Monti, 68, is expected to set out his government's agenda Thursday before the Italian Senate, which will hold a vote of confidence. The lower house is to follow suit soon thereafter.

Monti said his action plan would emphasize economic growth. But it also probably will encompass difficult austerity measures apt to arouse popular ire, along with other controversial reforms to make Italy more competitive, such as wresting open professions run by guilds that make entry for newcomers difficult.

Although critics have called Italy's new political arrangement undemocratic, backers hope that a technocratic, nonpartisan government can help rally Italy's fractious political establishment around the common good.

"I hope that, governing well, we can make a contribution to the calming and the cohesion of the political forces," said Monti, whom some have dubbed "Super Mario."

But markets remain skeptical, keeping the interest rate on Italian bonds hovering around 7% on Wednesday, the tipping point for the three nations — Greece, Portugal and Ireland — that have had to seek international bailouts.

In Athens, another unelected leader, Prime Minister Lucas Papademos, won a ringing endorsement from Parliament on Wednesday after being picked last week to head a government of national unity to tide over Greece for at least a few months.

At the center of Europe's raging debt crisis, Greece is struggling to stay afloat by accepting emergency loans from the European Union and the International Monetary Fund in exchange for implementing austerity measures that have set off a wave of public resistance and shrunk the economy drastically.

Papademos, 64, a former central bank governor who guided Greece's entry into the Eurozone, has committed himself to enacting a complex bailout plan crafted by European leaders last month that calls for yet more spending cuts as well as a 50% write-down of the value of privately held Greek debt.

"The task that this government assumes is titanic," Papademos told lawmakers moments before the confidence vote. "Every single vote cast in favor is an act of responsibility, one that will not endanger the country's future in the Eurozone."

He warned that there would be "no magical solutions" to Greece's financial crisis and that "the road to fiscal recovery will be rough."

Still, he won the support of 255 lawmakers in Greece's 300-seat Parliament. Papademos succeeds George Papandreou, who quit the prime minister's post amid intense political turmoil sparked by his since-revoked decision to put the unpopular European bailout plan to a referendum.

Papademos' power-sharing government is composed of leaders from the Socialist party, the conservative New Democracy party and a small far-right group. But cracks in the coalition have already emerged.

Eurozone leaders want written assurances from the three coalition partners that they will do whatever is necessary to make the new bailout plan work. Without that, they warn, they will block disbursement of $11 billion in rescue funds that Greece needs to avoid bankruptcy by mid-December.

On Wednesday, New Democracy leader Antonis Samaras reiterated his refusal to provide a written assurance, saying details of the European loan agreement had yet to be worked out and that further austerity measures would kill any prospects of growth.

"Is there any other country in Europe heading into a fifth year of recession?" he said. "We don't disagree with the goals of this fiscal adjustment plan, but the policy mix prescribed must change."

As for ordinary Greeks, the first sign of whether they accept their new government could come Thursday, when thousands of people are expected to take to Athens' streets for a protest march commemorating Greece's military-ruled past. Authorities have mobilized more than 5,000 police officers from across the country to head off violence.

henry.chu@latimes.com

Times staff writer Chu reported from London and special correspondent Carassava from Athens.

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