Europe on tenterhooks as Italy readies crisis plan

MILAN – Agence France–Presse

Italian Prime Minister Mario Monti is expected to unveil his crisis plan today. AP photo

Italian Prime Minister Mario Monti shored up support for a plan of budget cuts and pension reforms due to be unveiled today in a bid to defeat a crisis that has threatened to destroy the eurozone.

The measures are aimed at calming a wave of panic on the market that helped oust Monti’s predecessor Silvio Berlusconi and pushed borrowing costs as high as 8.0 percent, raising fears that Italy could slide into bankruptcy.

European leaders have raced to emphasize their support for Monti and most of Italy’s main political parties have also given him backing but trade unions are already up in arms over a series of proposed changes to pensions.

Monti, a former European Union commissioner and economics professor, warned Italians when he came to power last month that they faced “sacrifices” but said he would also strive for “equity” – today will test that balancing act.

The reforms have not been officially announced yet but are believed to include a tax on large capitals as well as pension reforms -- with the aim of balancing out the pain they will cause to left- and right-wingers alike.

“When a doctor arrives, it’s rare that the medicine prescribed is good. More often than not, it’s a bitter medicine. Especially when a sick man has to be saved,” said Pier Ferdinando Casini, leader of the centrist UDC party.

After meeting with Monti on Oc. 3, Angelino Alfano, the head of Berlusconi’s People of Freedom party, said: “Our main advice is to proceed with equity (so that) the burden be in line with what taxpayers can afford.”

“Monti has been called in precisely to take decisions which are far from easy,” Alfano said. But Susanna Camusso, head of Italy’s largest trade union, CGIL, said she would oppose the measures “we consider to be wrong.”

The measures are set to be adopted by the cabinet today and will then go before parliament for expected final approval before the Christmas recess.