On Saturday, interim Italian Prime Minister Mario Monti announced his decision to step down early, as soon as the 2013 budget law is approved, triggering general elections in February next year. Former Prime Minister Silvio Berlusconi (pictured) then announced his intention to run for premier, adding to the political controversy. Mr. Berlusconi had previously been forced to resign from office. But on Wednesday, Mr. Berlusconi claimed he would drop his candidacy if Mr. Monti agreed to run in the coming elections.
Resignation and Elections
Mr. Monti, a former EU commissioner, was appointed as Italy's interim Prime Minister after Mr. Berlusconi was forced to resign over Italy's economic turmoil. However, on Saturday, Mr. Monti confirmed he would step down early, as soon as the 2013 budget law is approved, after losing support from Mr. Berlusconi's center-right Popolo della Libertà (PdL) party. The PdL is the largest party in parliament.
Mr. Berlusconi then announced he would run in the next elections, accusing Mr. Monti's government of damaging Italy's economy with austerity measures. When he resigned, Mr. Berlusconi had initially promised not to contest a future vote.
However, on Wednesday, Mr. Berlusconi claimed he was willing to drop his candidacy in the coming elections, if Mr. Monti agreed to run as the head of a broad center-right coalition.
"I see Monti serving as Prime Minister [again] as a good thing for the country," Mr. Berlusconi said.
But it is unclear whether Mr. Berlusconi's remarks are sincere or a political ploy.
Dr. Yeo Lay Hwee, Senior Research Fellow at the Singapore Institute of International Affairs and Director of the EU Centre in Singapore notes that the Italian market took a beating following Mr. Berlusconi’s announcement that he might run.
"Technocrat Monti has been praised by various European leaders and officials for his efforts to “Save Italy” through a series of reforms and austerity measures, and the market’s reactions reflect the concerns over the implications of Berlusconi’s return to Italian politics on unfinished reforms in Italy."
"On other hand, however," Dr. Yeo added, "there were also rising discontents over tax hikes and austerity measures that Berlusconi has hoped to capitalise on for his comeback campaign."
"Some analysts however believed that Berlusconi is unlikely to mount a successful comeback and have predicted that the Centre-left Democratic Party under Pier Luigi Bersani who supported Monti’s reforms would win the elections next year. There were also speculations that Monti himself may also run in the elections likely to be held in February 2013 as he was being wooed by two other centrist groups."
However, thus far Mr. Monti has resisted calls to clarify whether he will be contesting the elections.
According to TIME Magazine, the fact that markets are in turmoil over the announced departure of one leader tells us a lot about the current state of affairs within the Eurozone. Although turmoil has receded in recent months, it is not due to any meaningful structural change. Nor is there much confidence that reform can continue.
Report: Berlusconi Adds to Italy Turmoil by Signaling He’d Step Aside [Bloomberg, 13 Dec 2012]
Report: Berlusconi Offers Not to Run if Monti Leads Center-Right Group [Wall Street Journal, 12 Dec 2012]
Analysis: What Mario Monti’s Exit Tells Us About Europe’s Debt Crisis [TIME, 12 Dec 2012]