Overwhelming support

Italy's new prime minister Mario Monti won a confidence vote in the lower house of parliament on Friday with an overwhelming majority of 556 out of 617 deputies, after unveiling a plan to tackle his country's economic and debt crisis.

Monti had already secured a decisive victory in the Senate on Thursday evening.

"The future of the euro … depends on what Italy will do in the next few weeks," Monti said in Rome on Thursday, in his first address to both houses of parliament as he laid out his interim government's plan to rescue Italy's wrecked economy.

The Italian prime minister is now set to discuss the eurozone crisis with European Council President Herman van Rompuy in Brussels on Tuesday and German Chancellor Angela Merkel and French President Nicolas Sarkozy in Strasbourg on Thursday.

Monti said his new technocrat cabinet would implement austerity measures that would be balanced by "growth and equity," and stressed Rome could not risk being considered Europe's "weak link" any longer.

The former European commissioner said the bloc was living through "the most difficult years since World War II" and warned that the European project "could not survive the collapse of the monetary union."

Monti set a 2013 goal for eliminating Italy's budget deficit - incidentally, a promise Berlusconi failed to keep - and stimulating economic growth, and said changes to the country's rigid labor market would be one of the main areas of focus.

The euro rose after his statement, reaching $1.3525 after having fallen to $1.3440.

Calming market jitters

Monti, whose economic program had been hotly awaited by global leaders, said the "unjustified privileges for certain sectors" in the labor market would be done away with, and that the pension system would be "overhauled."

Both are measures the European Union has called for, and their inclusion in Italy's reform package is expected to reassure markets. At present, Italy's government bonds have the highest yield in the history of the eurozone.

"With the reforms the spread will narrow," Monti said, adding: "The choices made by investors who buy public debt are guided by their expectations on what … Italy will be like in 10 and 20 years time."

Monti was referring to the recent spike in Italy's borrowing costs amid market doubts over the country's credit-worthiness. These have pushed to more than 500 basis points the spread between the premium demanded by investors for Italian government bonds compared to Germany's.

"If we fail, if we don't carry out the necessary reforms, we will also be subjected to much harsher conditions," he warned.

Welcome words

At one stage the new premier was interrupted by applause, in response to which he scolded: "Don't applause, listen!" - in stark divergence from the oftentimes comical way in which Berlusconi addressed parliament.

Monti was also serious when he addressed Italy's need to combat tax evasion, which he said amounted to "almost one fifth" of the country's gross domestic product.

Italy's two biggest political parties - Berlusconi's conservative People of Freedom party (PDL) and the center-left Democratic Party - have both said they will back Monti. A centrist grouping has also promised its support.

Monti's cabinet, which consists mostly of academics and experts and contains no political party representatives, was sworn in on Wednesday.

Author: Gabriel Borrud (AFP, dpa, Reuters)
Editor: Martin Kuebler