Italy And Greece: Turning Over A New Page – OpEd

By Polina Romanova

The post-Berlusconi era has begun in Italy. The country’s new Prime Minister Mario Monti has accepted a mandate to form a new government. Meanwhile, Greece is experiencing the same: the parliament is preparing to host a confidence vote following the appointment of Lukas Papadimos as the country’s new head of government. Both Rome and Athens are interested in restoring stability of their economies to receive aid from the international financial institutions.

World stocks have gone up as Greece and Italy seem to be coping with the debt crisis. Rome made headlines last weekend when President Giorgio Napolitano and the country`s senior politicians gathered to discuss an anti-crisis budget which should be approved following the resignation of Silvio Berlusconi.

Maxim Zaitsev, a senior analyst for the Nord-Capital investment group, comments:

“Now that stock markets have reacted positively to the changes of government, we may expect further growth, although investors were more concerned with budget approval rather than government shifts. The anti-crisis budget has been adopted in Italy, offering a temporary solution to the country`s debt problems and removing the risks of global recession. Coupled with positive macroeconomic statistics in the U.S, this promises a stable growth at global markets this week.”

The newly-appointed Italian Prime Minister Mario Monti, a 68-year-old economics professor and ex-EU commissioner, has started consultations on Monday on the formation of a new Cabinet.

“Mr. Monti is expected to resolve the crisis in quite a tough way”, political analyst and professor at the Cattolica University in Milan,Pierluca Azzaro, said in an exclusive interview with the VoR:

“On the one hand, Italy must cut expenses, which is –on the other hand- a very challenging task to do. If it proceeds with cuts, the country’s administrative system will be ruined. In view of this, reforming the entire economic system and implementing expense reduction- are the key tasks for Mr. Monti`s Cabinet. Apart from this, Rome is interested in restoring confidence in relations with Europe and the IMF.”

Investors are closely watching the situation in Greece, where the newly-appointed Prime Minister Lukas Papadimos is expected to offer a rescue plan to receive a new bailout from the EU and the IMF, otherwise the restructurization of Greek debts will be unlikely to happen. Nevertheless, hardly anybody doubts that Papadimos will meet the creditors` demands. Now that the economic situation in Europe has stabilized, the focus will be made on the US, says the head of the department for investments at the Capital company, Alexei Belkin:

“Speculators attempted to focus on France last week. Meanwhile, everyone is waiting for November 23d when the US bipartisan “super-committee” is expected to decide on budget cuts. So, the market is now closely watching fiscal problems of the US economy and prospects for further economic growth.”

The US super-committee was set up in August and comprises both Democrats and Republicans. It is expected to issue a recommendation on necessary spending cuts and tax increases. With a deadline in the middle of next week, the members of the super- committee are holding fierce debates on the issue. Obviously, these talks will cost both sides much effort in the aftermath of this summer`s default threat in the US.