Italian lawmakers have yet to receive the austerity legislation that parliament must pass before Prime Minister Silvio Berlusconi resigns, Senate Finance Committee Chairman Mario Baldassarri said.
The amendment containing the proposed measures “was supposed to arrive last Thursday” in parliament, and then “it was supposed to arrive Friday,” Baldassarri, who left the premier’s party last year to join the opposition, said in an interview today in Rome. “Monday, they let us know they would wait for the vote in the Chamber of Deputies,” which took place yesterday.
The Senate Budget Committee suspended a session scheduled this morning to examine the legislation after failing to receive the text. The board reconvened in the afternoon, only to break up again after it had still not received the document. Finance Minister Giulio Tremonti presented the legislation to President Giorgio Napolitano today in Rome, the president said in an e-mailed statement.
After failing to muster an absolute majority in a routine vote in the lower house yesterday, Berlusconi offered to resign as soon as parliament approves the legislation, which the government says will contain some of the austerity and economic-growth steps pledged to the European Union and the European Central Bank. The measures are to be part of a “maxi-amendment” to be voted on in the Senate next week and the lower house afterwards.
“The most serious problem is they haven’t even been able to write the maxi-amendment because they can’t agree on anything among themselves,” Baldassarri said. “If they write the word ‘pensions,’ the government will fall. If they write the words ‘labor market’ or ‘liberalization,’ the government will fall.”
Italian bonds plunged today, driving the 10-year note yield to more than 7 percent for the first time since the euro was introduced in 1999. That’s the same level that drove Greece, Ireland and Portugal to seek bailouts. Italy’s $2.1 trillion economy is the euro region’s third biggest and the second most-indebted after Greece.
The extra yield investors demand to hold 10-year Italian debt instead of similar-maturity benchmark German bunds surged 56 basis points to 5.52 percentage points at 5:26 p.m. in Rome after Berlusconi’s offer to resign. That compares with 1.22 percentage points seven months ago.
“People think once Berlusconi resigns, Italy’s problems are solved,” Baldassarri said. “But even if the cork’s come off the bottle, that’s not champagne that we’ve got to drink: Who’s willing to down it?”
Napolitano, nothing his concern over Italy’s “alarming” level of borrowing costs, said the austerity legislation will be approved “within a few days,” after which a new government can quickly be formed or early elections swiftly staged.
“There’s no risk of political stability,” the president said in an e-mailed statement, adding that there’s no doubt “whatsoever” that Berlusconi will respect his vow to resign.
With opposition to the economic revamp high across the political spectrum, Italy needs a transitional government with cross-party support to ram through the overhaul, Baldassarri said. Early elections would be the “worst solution” because they couldn’t be held until February or March, a delay that could spell “economic disaster for Italy,” he said.
While former EU Commissioner Mario Monti may be a candidate to head a so-called technical administration, a figure able to provide more “political” leadership may be required, said Baldassarri, who’s a member of the Freedom and Liberty Party. He didn’t offer any names.
“Italy’s real roadblock is cutting public spending, waste and graft which amount to between 40 billion euros ($55 billion) and 50 billion euros a year, which would give us the resources we need,” Baldassarri said. “The problem is that there are about 300,000 Italians” who profit from this arrangement, “and so far they are more powerful than 60 million other Italians.”