Italian PM Berlusconi Takes a Page from America’s Founding Fathers
Italy’s Prime Minister Berlusconi borrows from the American Founding Fathers and the US Constitution two basic principles for the nation’s economic and financial reform and vows to complete term, focusing on growth.
By Guido George Lombardi
Italian Premier Silvio Berlusconi vowed on Wednesday to complete his five-year term and focus his government policies on growth to calm the market turmoil that threatens Europe. Taking a leadership role, with support from France and Germany, Italy’s unsinkable PM proposed two constitutional amendments that, even if familiar with US and Tea Party voters, are new to European politics. First a much needed BALANCED BUDGET mandate, a constitutional law that will require a balanced budget by 2011. Another important principle, well know in the US, but not yet part of the European mindset, is the principle that “people, and businesses, are free to act unless specifically forbidden by law”. Seems obvious to us Americans, but in the old continent it is not so. The state regulates what you can do as well as what you cannot. People and businesses are constantly worried if their actions and activities are lawful or not, and often the lack of clear regulations stifles innovation and change.
After a number of volatile days, due to the US crisis, on markets, Berlusconi told parliament that Italy “has done some, but not enough” in response to the crisis. “But we know there is more to do.”
Addressing the lower house of Parliament, and then the Senate in Rome, he said Italy needs to promote competitiveness and growth. He emphasized that Italian banks remained solid and that investors who were pushing up Italy’s borrowing rates did not recognize the country’s fundamental strengths: a stable banking system, low levels of private sector indebtedness — half that of the United States and Britain — and a strong entrepreneurial spirit.
“Our duty as the government is to work for the good of Italy, making the economy take off,” he said.
Berlusconi was firm that he will stay in office until his mandate expires in 2013.
Berlusconi said that the 70 billion Euros ($99 billion) in austerity measures passed last month will balance the budget by 2014, and emphasized that another 9 billion in infrastructure projects, mostly in the poorer south approved earlier Wednesday, will help promote growth.
“Everyone does his own part: stability has always been the winning strategy against speculation,” he said.
Italy’s 10-year borrowing rate briefly spiked to 6.21 percent before easing to 6.06 percent.
Spain was also under the market spotlight, forcing Prime Minister Jose Luis Rodriguez Zapatero to delay his vacation by two days. Its 10-year borrowing rate edged down to 6.23 percent from Tuesday’s euro-era high of 6.45 percent.
Last month, the leaders of the 17 eurozone countries agreed to changes to the region’s rescue fund that would allow it to act pre-emptively, for instance by providing short-term loans or buying up ailing bonds on the open market, before a country is in a full-blown crisis.
However, actually implementing those decisions takes time, and in many cases the changes to the fund’s powers will have to be approved by national parliaments, most of which are currently on summer break.
Earlier Wednesday, Finance Minister Giulio Tremonti held talks with some of the currency union’s top officials. He traveled to Luxembourg to meet Jean-Claude Juncker, who chairs the regular meetings of eurozone finance ministers, and spoke on the phone with the EU’s Monetary Affairs Commissioner Olli Rehn.
Rehn expressed full confidence that Tremonti and the Italian authorities in general are taking the necessary measures to get the country’s economy back on track.
Italy has debt nearing 120 percent of economic output, but had been viewed for months with calm by bond markets. The country has low levels of private debt and has not had the real estate and banking collapse that caused trouble for the United States, Greece, and Ireland.