Kissinger’s ‘Favorite Communist’ Paves Way for Mario Monti to Govern Italy

Italy’s new government, headed by former European Union Commissioner Mario Monti, has an unlikely supporter in President Giorgio Napolitano, an ex-communist who once praised the Soviet Union for crushing the 1956 reformist movement in Hungary.

Napolitano, whose post is usually ceremonial, earlier this month emerged as the key Italian contact for foreign leaders including German Chancellor Angela Merkel and French President Nicolas Sarkozy as Italian bond spreads widened to a record during a deepening debt and political crisis.

As Prime Minister Silvio Berlusconi’s majority unraveled amid plummeting investor confidence, Napolitano, 86, sounded out Italy’s political and business elites to build a consensus on the country’s future. Berlusconi resigned Nov. 12 and Monti was sworn in four days later.

“The president took on this role because we gave the impression in the last two months that there was neither a government nor an opposition to talk to,” Mario Baldassarri, a former Berlusconi ally who chairs the Senate Finance Committee, said in an interview. “We’ve never had the spread at 570 basis points, so in the face of a situation without precedent, the president has behaved in an unprecedented way.”

Photographer: Chris Warde-Jones/Bloomberg

Italy's president Giorgio Napolitano. Close

Italy's president Giorgio Napolitano.

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Photographer: Chris Warde-Jones/Bloomberg

Italy's president Giorgio Napolitano.

Backing Confindustria

Napolitano, who was part of the anti-Fascist resistance and helped publish Marxist writings during World War II, in July of this year backed a call by employers’ lobby Confindustria to make economic growth a pillar of policy alongside fiscal rigor. That kind of pragmatism led former U.S. Secretary of State Henry Kissinger to once call the Italian politician “my favorite communist,” Napolitano told Corriere della Sera in a 2001 interview.

On Nov. 13, four days after the yield on Italy’s benchmark 10-year bond surged to 7.25 percent, the highest close since the euro’s introduction in 1999, Napolitano called on all those “concerned about the nation’s fate” to avoid “a precipitous recourse” to early elections.

Italy’s priority must be to reassure investors as it seeks to refinance “about 200 billion euros in Treasury debt maturing through April” of next year, the president said in a nationwide address after consulting with parties on a new government. The 10-year yield climbed to 6.82 percent today, up 16 basis points from yesterday.

Market Economy

The president’s journey from Communist Party member to defender of his country’s market economy “must be put into the context of the anti-Fascist resistance and postwar Italy,” said Riccardo Barbieri, chief European economist at Mizuho International Plc in London. Napolitano was “the leading figure in the reformist wing of the Italian Communist Party and a believer in a transition to a social-democratic position.”

The son of a Naples attorney, Napolitano joined the Communist party, or PCI, in 1945. After Warsaw Pact soldiers crushed the 1956 anti-Soviet uprising in Hungary, killing some 3,000 people, Napolitano defended Moscow, claiming the crackdown not only halted a “counter-revolution, but contributed to world peace,” according to a 2006 article in Corriere della Sera.

In 1969, Napolitano helped lead a partial break by western Europe’s largest communist party away from Kremlin hardliners, as the Italians criticized Moscow’s decision to put down the Czech Prague Spring movement the year before. Napolitano helped pen his party’s statement of “profound disagreement” over the invasion, while still expressing solidarity with the Soviet Union, according to Victor Zaslavsky, a historian at LUISS University in Rome who died in 2009.

Seeking Options

More than 40 years later Napolitano, who’s been president since 2006, again found himself seeking a “third way” for Italian politics. As Berlusconi’s majority crumbled and investors dumped the country’s debt, the president began seeking new options amid a worsening sovereign crisis.

His support of the Confindustria economic position, a tacit criticism of then-Finance Minister Giulio Tremonti’s austerity- only approach, came as he stepped up talks with powerbrokers like opposition leader Pierferdinando Casini, Confindustria head Emma Marcegaglia, then-Bank of Italy Governor Mario Draghi and Romano Prodi, a former European Commission president.

“Faced with a crisis of confidence in Italy, it was quite evident that Berlusconi was the problem and a solution had to be found,” said Giacomo Vaciago, a professor at Milan’s Catholic University and an adviser to previous Italian governments.

‘Common Cause’

Monti, who had pushed the idea of pairing “growth with rigor” in a series of columns in Corriere, cited Napolitano in four of the articles, ending his Aug. 14 op-ed piece by quoting the president’s appeal for Italians to join “a common cause” for the good of their country.

“Monti’s new government is partly the president’s government,” Francesco Rutelli, a former Rome mayor and prime ministerial candidate for the center-left, said Nov. 16. “Some of us began thinking a few years ago that this would be the only solution to Berlusconi’s two-decade reign.”

Berlusconi, who entered politics in 1994, often rails against communists, saying they’re still a threat to the country two decades after the Soviet Union collapsed. While Berlusconi has always had publicly cordial ties with Napolitano, he’s made no secret of his opinion of the former PCI member, saying in October 2009 that “you know which side he’s on.”

“The history of communism, with more than 100 million killed, is not behind us,” Berlusconi said in an address in Milan on Feb. 26. “They’ve transformed themselves into the Labour Party in Great Britain and the Social Democrats in Germany, while here at home they’re still communists. And that’s why I’m in politics.”

To contact the reporter on this story: Jeffrey Donovan at jdonovan26@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net.

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