Italy crisis: President holds talks to find new leader

Italian Giorgio Napolitano (second left) hold talks with Northern League leader Umberto Bossi (centre) at the Quirinale Palace in Rome - 13 November
Image caption The Northern League's Mr Bossi says he will not back PM hopeful Mario Monti

Italy's President Giorgio Napolitano has been holding a series of meetings with senior politicians to try to agree on a new caretaker government after PM Silvio Berlusconi resigned on Saturday.

It is hoped the new government will be named before the world's financial markets re-open on Monday.

Ex-EU commissioner Mario Monti, favourite for the top job, has been summoned to see the president.

He will be tasked with implementing tough austerity measures.

Mr Napolitano held 17 meetings with leading politicians on Sunday.

Angelino Alfano, a senior figure in Mr Berlusconi's People of Freedom Party, said after meeting the president that the party was ready to back Mr Monti, but it would depend on the new government's make-up and policies.

No politician who "was engaged in pure anti-government militancy" while Mr Berlusconi was in power should join it, he said.

Speaking in a recorded TV address, Mr Berlusconi himself said he would redouble his efforts in parliament to modernise Italy.

The BBC's Karin Giannone in Rome says the speech suggests Mr Berlusconi is determined to retain a powerful role behind the scenes in Italian politics.

Most centrists and centre-left parties in the opposition have already pledged their support to Mr Monti, but Mr Berlusconi's main coalition ally, the Northern League, has made clear it wants early elections and will not back him.

On Sunday, its leader Umberto Bossi reiterated his party would "not back technocrat PM Monti until we know his policies".

Hostile crowd

The new prime minister will be responsible for implementing austerity measures aimed at tackling Italy's debt crisis, which last week saw its cost of borrowing rise to record levels and prompted alarm across the eurozone.

Amid the crisis, Mr Berlusconi lost his parliamentary majority and promised to resign once measures demanded by the EU and designed to restore markets' confidence in the country's economy had been passed by both houses of parliament.

Members of the lower house voted 380-26 with two abstentions on Saturday, a day after the Senate approved the measures that have now been signed into law.

Mr Berlusconi, who dominated the country's politics for 17 years and became Italy's longest-serving post-war prime minister, drove to the presidential palace on Saturday evening to tender his resignation.

Police struggled to control a large, hostile crowd which booed and jeered as his convoy swept by.

"Gangster" and "buffoon" were among the insults hurled at him, after his premiership became marred by scandals.

He is currently involved in several trials for fraud, corruption and having sex with an under-age girl, and has attracted media attention for so-called "bunga-bunga" parties which young women were allegedly paid to attend.

After his resignation, he left by a side exit to avoid the protesters.

But on Sunday he came out fighting, saying he was proud of his achievements and writing in a letter to a small conservative party: "I share your spirit and I hope to resume together the path to government".

Stop-gap measure?

Mr Napolitano's spokesman Donato Marra said the president had invited the outgoing government to "remain in power in order to finish current business".

Mr Monti, a well respected economist, is exactly the sort of man that the markets would like to see take charge at this time of crisis, says the BBC's Alan Johnston in Rome, and he has support in many quarters.

But there is significant opposition to him within the country, and a feeling that Italy's troubles are just too deep for a mere change of government to make any rapid, significant difference.

The austerity package foresees 59.8bn euros in savings from a mixture of spending cuts and tax rises, with the aim of balancing the budget by 2014. Measures include:

  • An increase in VAT, from 20% to 21%
  • An increase in fuel prices
  • Sales of state property
  • A freeze on public-sector salaries until 2014
  • The retirement age for women in the private sector will gradually rise, from 60 in 2014 until it reaches 65 in 2026, the same age as for men
  • Measures to fight tax evasion will be strengthened, including a limit of 2,500 euros on cash transactions
  • There will be a special tax on the energy sector

On Wednesday, the interest rate on 10-year Italian government bonds briefly passed 7%, the rate at which Greece, Ireland and Portugal were forced to seek bailouts from the EU.

An EU team has begun work in Rome, monitoring how Italy plans to cut its debt burden, 120% of annual economic output (GDP).

The Italian economy has grown at an average of 0.75% a year over the past 15 years.