Rome: Italian President Giorgio Napolitano has given a mandate to former European Commissioner Mario Monti to try to form a new government, a senior official of the head of state's office said on Sunday.
Monti must now draw up a Cabinet, lay out his priorities and see if he has enough support in Parliament to govern effectively.
Hours earlier, Silvio Berlusconi's party gave its crucial approval for Monti to assemble a government, but insisted that it last only long enough to implement urgently need economic reforms. Berlusconi resigned reluctantly on Saturday, bowing to market pressures.
Berlusconi resigned reluctantly on Saturday, bowing to market pressures.
"I resigned out of a sense of responsibility and of state, to ward off more speculative financial attacks on Italy," he told the nation on Sunday evening in a televised message, his first public comment since stepping down after 3-1/2 years in office.
But Berlusconi's ally, the Northern League, said it would become an opposition party rather than back Monti.
After days of being pummelled by international investors skittish about Italy's massive debts, Italy faced severe pressure from financial markets to have a new government before Asian markets open.
Monti now has to assemble a cabinet, present his rescue strategy to Parliament, and then seek a confidence vote after a debate. All that could take a few days.
Pierluigi Bersani, head of the largest opposition force, made up largely of former Communists and Christian Democrats, said his party would back an "emergency, transition government", whose "strong, technical, authoritative character" will help Italy deal with the crisis.
Whoever leads Italy faces a monumental task: an Italian default could tear apart the coalition of 17 countries that use the euro and wallop Europe and the US, which are trying to avoid new recessions.
Italy's economy is hampered by high wage costs, low productivity, fat government payrolls, excessive taxes, choking bureaucracy, and an educational system that produces one of the lowest levels of college graduates among rich countries.
In addition, as the third-largest economy in the eurozone, Italy is considered too big for Europe to bail out like it did Greece, Portugal and Ireland.
The next Italian government needs to push through even more painful reforms and austerity measures to deal with EUR 1.9 trillion (USD 2.6 trillion) in debt — about 120 percent of the country's economic output. And many of those debts are coming due soon — Italy has to roll over more than EUR 300 billion (US D410 billion) of its debts next year alone.
Most centrists and centre-left parties in the opposition have pledged support for a Monti government, saying the former European Union competition commissioner has the moral authority and economic know-how to get Italy to pass long-delayed structural economic reforms.
"Italian parties are at fork in the road. Either they speculate on the situation, hoping that they can get some campaign capital from it, or they take up their responsibilities to save the country," said centrist opposition leader Pier Ferdinanco Casini, expressing hope that a new government could last until elections are scheduled for spring 2013.
But Umberto Bossi said his Northern League party won't back any Monti-led government "for now”. Bossi said he told Napolitano that his party, whose support kept Berlusconi's conservative coalition in power for years, will be a "vigilant" opposition to any Monti government until the economist spells out his plans.
"For now, we said, 'no.' Then we'll see the program and decide, time by time" whether to support specific legislation, Bossi said. "In any case, we won't give him any blank check."
Bossi's party has been demanding early elections instead. He also has opposed one key remedy, a pension reform that raises the retirement age for women.
Roberto Maroni, a founder of the Northern League, said he personally esteems Monti but won't back him.
"Parliament must have the guarantee of an opposition," Maroni told Italy's Sky TG24 TV. "Otherwise it won't be a democratic Parliament."
Pressured for days by the markets, the 75-year-old Berlusconi stepped down on Saturday night after new austerity measures won approval in Parliament. He slipped out of the presidential palace through a side door after handing in his resignation, as a hecklers jeered in the square outside the main entrance.
Even those new austerity measures are not enough to revive the dormant Italian economy. They raised the retirement age to 67, but not until 2026. They called for the sale of state property and privatising some services but contained no painful labour reforms.
Maroni said he spoke with Berlusconi on Saturday night and found him "very tried, physically tired. But he is always a great fighter”.
"It was an ugly show to see. People spitting, throwing" objects, Maroni said.
"This phase is over, a blank page is being opened," Maroni said, holding out hope that the League and Berlusconi's forces might again join in a future political coalition.
Berlusconi's longtime nemesis, former anti-corruption prosecutor Antonio Di Pietro, said his small Italy of Values Party would be willing to back a strictly "technocrat" government with no politicians in the cabinet "to respond to the (economic) emergency and give back this country its credibility."
Without mentioning Monti by name, Di Pietro insisted that elections must be held as soon as possible. But, he acknowledged, "in these hours of emergency, it's very hard" to carry out an electoral campaign.
Monti was reserved on Sunday as he and his wife headed to church in Rome. Asked whether he was excited at the prospect of being Italy's next premier, he responded: "Have you noticed what a beautiful day it is?"
First Published: Sunday, November 13, 2011, 23:03