by Veronica Pinotti and Martino Sforza
On Sunday November 13, 2011, Mario Monti, a former member of the European Commission, conditionally accepted a mandate to form a new Government. The main task of the new Italian Government will be to adopt a package of economic reforms considered necessary by the European Union to cut Italy’s massive debt and restore the market’s confidence. Italy must repay or refinance around €200 billion (approximately US$276 billion), worth of maturing bonds by April 2012. If Italy is forced to continue to pay high rates for borrowings, it will have difficulty in handling its debt load, which is among the highest in Europe.
Monti is expected to present his cabinet and program for reform to the Italian Parliament in a few days. In order to be able to push through the urgent economic measures, he will ultimately need the support of a broad parliamentary coalition, which (considering Italy’s current political environment) might put the durability of the new Government at risk.
Mario Monti is one of the most prominent economists in Europe and former President of Milan Bocconi University. Between 1995 and 2004, he served as European Commissioner responsible for the Internal Market and Competition, where he won cornerstone antitrust cases such as those against Microsoft and General Electric. He also adopted important legislative changes, showing great sensibility for antitrust related matters.
Many McDermott lawyers have had the chance to work with and know Monti personally from his time at the European Commission. He has the necessary gravitas and rigour to lead the country for a transitional term, which may last a few months. His future administration is likely to reflect his long-run priorities, such as the adoption of liberalisation measures and the gradual reduction in state ownership of local services, as well as a higher level of antitrust scrutiny to increase market competition. These policy objectives are expected to be coupled with the adoption of the austerity measures needed to reform the Italian economy. Such measures may consist of a raise in the standard retirement age, or a pledge to raise funds from public real estate sales.