Friday, November 11, 2011

Italy: Senate approves austerity measures amid political turmoil

Italy's Senate approved on Friday the austerity measures demanded by the European Union to avert a euro zone meltdown. The new budget law is to clear the way for final approval of the package in the lower house tomorrow and the formation of an emergency government to replace Prime Minister Silvio Berlusconi.

The austerity and reform measures, aimed at boosting the economy and controlling a huge public debt, followed demands by European partners for urgent action to restore market confidence in Italy's strained public finances.

Berlusconi, who failed to secure a majority in a crucial vote on Tuesday, has promised to resign once the law receives final parliamentary approval.

Yesterday, US piled on the pressure on Italy’s government. US President Barack Obama ratcheted up pressure for more dramatic action from the currency bloc.

Obama spoke with German Chancellor Angela Merkel and French President Nicolas Sarkozy late yesterday and also called Italian President Giorgio Napolitano.

A German government official said there was an "exchange of opinions," while Treasury Secretary Timothy Geithner demanded fast action from Europe.

"The crisis in Europe remains the central challenge to global growth. It is crucial that Europe move quickly to put in place a strong plan to restore financial stability," Geithner said in a statement following a meeting with finance ministers from the Asia Pacific Economic Cooperation countries.

Voting for the first time in the Italy’s senate was Mario Monti, the former European Commissioner who has emerged as favorite to replace Silvio Berlusconi as prime minister.