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Stage Is Set for Turmoil in Italy Next Act in Italian Drama: Exit Monti the Technocrat, Enter Monti the Politician?
(about 4 hours later)
ROME — For months, he had flirted with the idea of staying out of politics, but in the end, former Prime Minister Silvio Berlusconi just could not resist. His statement on Saturday that he would seek office out of a sense of “responsibility” for his country effectively ended the mandate of the technocratic Prime Minister Mario Monti, who said he would step down after Parliament passed a budget bill later this month. ROME — For months, he had flirted with the idea of staying out of politics, but in the end former Prime Minister Silvio Berlusconi just could not resist. His statement on Saturday that he would seek office again out of a sense of “responsibility” for Italy effectively ended the mandate of Prime Minister Mario Monti, who said he would step down after Parliament passes a budget bill this month.
Mr. Monti’s surprise announcement late Saturday raised the prospect of more political uncertainty and market turmoil for Europe’s third-largest economy in what is expected to be a gloves-off election campaign. But it also increased the possibility that Mr. Monti might decide to run as a candidate, not only as an apolitical leader open to governing if national elections — now expected as soon as February — yield no clear winner. Mr. Monti’s surprise announcement on Saturday raised the prospect of more political uncertainty and market turmoil for Italy, Europe’s fourth-largest economy, in what is expected to be a gloves-off political campaign. But it also increased the possibility that Mr. Monti might run as a candidate — a shift from the role of an apolitical leader — who is open to governing if no clear winner emerges from elections expected as soon as February.
Three years into Europe’s debt crisis, the new developments in Italy underscore the clash between the economically sound and the politically sustainable. While Mr. Monti, an economist and former European commissioner, has reassured investors and helped tamp down Italian borrowing rates, the tax increases and spending cuts passed by his Parliament have eroded lawmakers’ standing with voters. Three years into Europe’s debt crisis, the new developments in Italy underscored the clash between the economically sound and the politically sustainable. While Mr. Monti, an economist and a former European commissioner, has reassured investors and helped keep Italian borrowing rates down, the tax increases and spending cuts passed by his Parliament have eroded lawmakers’ standing with voters.
Even if Mr. Monti decides not to run as a political candidate, his decision to step down inevitably sets the stage for a battle that pits the subtly ironic technocrat — who on Friday attended the premiere of Wagner’s “Lohengrin” at La Scala — against Mr. Berlusconi, who made his announcement to run for office outside the facility where his A.C. Milan soccer team plays. Mr. Monti’s grasp of economics and experience in European politics made him a power broker who took regular calls from the White House and worked with France and Spain to wring euro-zone concessions from a reluctant German chancellor, Angela Merkel.
“The war will be between Monti and Berlusconi,” said Massimo Franco, the chief political commentator for Corriere della Sera, an Italian daily newspaper. “The moderate votes are in play, not the leftist ones.” “He’s ushered in a turning point in Italian politics and has been a major influence in Europe,” said Thomas Klau, director of the Paris office of the European Council on Foreign Relations. “He has helped turn Italy into a serious country again in the eyes of foreign investors and also many of its own citizens.”
Although Mr. Berlusconi said he would run for office out of a sense of “responsibility,” European leaders and market analysts immediately accused him of the opposite. Martin Schulz, the president of the European Parliament, called his decision to return to politics “a threat for Italy and Europe, which need stability,” the Italian news agency Ansa reported. Even if Mr. Monti decides not to run as a political candidate, his decision to step down sets the stage for a battle that pits him — a subtly ironic technocrat who attended Wagner’s “Die Lohengrin” at La Scala on Friday — against Mr. Berlusconi, who made his announcement at the training site of his soccer team, A. C. Milan.
Many investors and European leaders worry that many of Mr. Monti’s overhauls — even ones that have not yet been approved by Parliament — could be undone by future Italian governments. “The war will be between Monti and Berlusconi,” said Massimo Franco, chief political commentator for the newspaper Corriere della Sera. “The moderate votes are in play, not the leftist ones.”
In an interview with Il Sole 24 Ore, a financial daily, the European Commission president, José Manuel Barroso, said that Italy was at risk of being hit by a deeper financial crisis. “The next elections must not serve as a pretext for putting in doubt how indispensable these measures are,” Mr. Barroso said. “The relative calm on the markets does not mean we are out of the crisis.” Although Mr. Berlusconi said he was motivated by a sense of responsibility, European leaders and market analysts immediately accused him of the opposite. Martin Schulz, president of the European Parliament, called his return to politics “a threat for Italy and Europe,” the ANSA news agency reported.
Analysts said that Mr. Monti’s decision to step down ahead of schedule was aimed at preventing Mr. Berlusconi from running an election campaign that undermined and criticized Mr. Monti even while Mr. Berlusconi’s People of Liberty party supported the Monti government. With the aid of Mario Draghi, president of the European Central Bank, Mr. Monti calmed the financial markets this year, but investors and European leaders now worry that many of Mr. Monti’s initiatives could be undone by future governments.
Mr. Berlusconi, always attuned to the national mood, even of an electorate that is increasingly weary of him, now looks poised to run on a populist campaign that will criticize Mr. Monti for having foisted unpopular measures on Italians and the single currency for having eroded Italian sovereignty. In an interview with the business newspaper Il Sole 24 Ore, José Manuel Barroso, president of the European Commission, said that Italy was at risk of being hit by deeper financial problems. “The next elections must not serve as a pretext for putting in doubt how indispensable these measures are,” he said. “The relative calm on the markets does not mean we are out of the crisis.”
On Sunday, the lead headline in Il Giornale, a newspaper owned by the Berlusconi family, read: “Farewell, Monti. He Quit. Finally.” Analysts said that Mr. Monti’s decision to step down ahead of schedule was aimed at preventing Mr. Berlusconi from running a campaign that undermined him. Mr. Berlusconi, always attuned to the national mood, even of voters increasingly weary of him, now looks poised to run a populist campaign that will criticize Mr. Monti for foisting unpopular measures on Italians and that may attack the adoption of a single currency for eroding Italian sovereignty.
Stepping down now, rather than early next year, as was expected, puts Mr. Monti in play. Stepping down now, rather than early next year, as was expected, also puts Mr. Monti in the fray. “Monti becomes a politician at this point,” said Stefano Folli, a political columnist for Il Sole 24 Ore. “If Monti helps create a space on the ballot for an electoral alliance that recognizes the seriousness of what has been achieved, this could create a new political balance. That’s the challenge.”
“Monti becomes a politician at this point, that’s the main thing,” said Stefano Folli, a political columnist for Il Sole 24 Ore. “If Monti helps create a space on the ballot for an electoral alliance that recognizes the seriousness of what has been achieved, this could create a new political balance. That’s the challenge.” Polls show that the center-left Democratic Party is likely to place first in elections, but without enough votes for a majority. But the party remains divided over which ally to choose to form a government.
Polls show that the center-left Democratic Party is poised to place first in elections, although without enough votes to form a government. Pierluigi Bersani, a moderate former communist and a former industry minister, recently secured his place as party leader after defeating Matteo Renzi, the charismatic and more centrist 37-year-old mayor of Florence, in the party’s first-ever primaries. But the party remains divided over whom it would be willing to ally with to form a government. Mr. Berlusconi is expected to secure enough votes to stay in Parliament and keep his immunity from prosecution in various trials, but not enough votes to govern.
Mr. Berusconi’s decision to run for office forces members of his crumbling People of Liberty party, a charismatic movement in which he controls not only the political airspace but also the purse strings, to decide whether to stick with him or to defect to fledgling centrist groupings, some of which have expressed their support for Mr. Monti. “It is extremely unlikely that we will see a dynamic unfolding which would bring Mr. Berlusconi back to power,” Mr. Klau said. “So even if Mr. Monti were to leave the political stage for good, we would not go back to the political situation we were in before.”
Despite a year of pleading by President Giorgio Napolitano, the political parties have been unable to arrive at a decision on how to improve Italy’s much-maligned electoral law. Modifications that would give the winning parties a percentage of bonus seats would make the political landscape more stable, but would not be in the parties’ interest, critics say. Although Parliament has blocked some of the measures on Mr. Monti’s agenda — in recent weeks, lawmakers have proposed more than 1,500 amendments to the budget bill — the budget is likely to be approved, as is a law that requires Italy to balance its budget each year.
Indeed, even before Mr. Monti said he would step down, Parliament has increasingly blocked some of the measures on the agenda. In recent weeks, lawmakers have proposed more than 1,500 amendments to the budget bill, which Mr. Monti pledged to pass before stepping down. The bill is still likely to be approved, as is a law that requires Italy to balance its budget each year. But analysts said that other changes aimed at improving Italy’s competitiveness were at risk. And before the end of the legislative session this month, lawmakers must also vote on a bill that would simplify the tax code, another meant to streamline the cumbersome bureaucracy and a measure that to allow the Ilva steel plant — a major economic engine for Italy — to stay open while it modernizes to meet environmental standards.
But analysts said that other reforms aimed at cutting and improving Italy’s competitiveness are at risk, including a development decree that would regulate various sectors, including broadband Internet service, and permit generic drugs. As the debt crisis has lingered, such local issues, as well as Italy’s chaotic political system, have taken on international importance.
Before the end of the legislative session later this month, the government must also vote on changes aimed at simplifying Italy’s tax code, a bill meant to streamline Italy’s cumbersome bureaucracy, and on a law that would allow the Ilva steel plant, the largest in Europe and responsible for €8 billion euro, or about $10 billion, in Italian economic output, to continue production while it modernizes to meet environmental standards. On Sunday, Ferruccio de Bortoli, the editor in chief of Corriere della Sera, offered his review of the political drama: “The ‘Lohengrin’ at La Scala ended in applause. The Italian tragedy continues. The libretto still needs writing, so does the music. The guaranteed audience is international, but unfortunately not terribly forgiving about the cast. The curtain never falls.”
A bill that would eliminate numerous Italian provinces has also languished after fierce opposition from local administrations and political parties who are not enthusiastic about losing power.

Reporting was contributed by Elisabetta Povoledo from Rome, Stephen Castle from London and Jack Ewing from Frankfurt.

Such local issues, as well as Italy’s famously chaotic political system, have taken on international importance. This article has been revised to reflect the following correction:
“The ‘Lohengrin’ at La Scala ended in applause. The Italian tragedy continues,” Ferruccio de Bortoli, the editor in chief of Corriere della Sera wrote on Sunday. “The libretto still needs writing, so does the music. The guaranteed audience is international, but unfortunately not terribly forgiving about the cast. The curtain never falls.”
Elisabetta Povoledo contributed reporting.

This article has been revised to reflect the following correction:

Correction: December 9, 2012Correction: December 9, 2012

An earlier version of this story stated that the the Ilva steel plan was responsible for 8 million euro. The correct number was 8 billion euro.

An earlier version of this story stated that the the Ilva steel plan was responsible for 8 million euro. The correct number was 8 billion euro.