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Italy’s New Leader Reassures E.U. Leaders on Budget Italy’s New Leader Reassures European Leaders on Budget
(about 1 hour later)
BRUSSELS — The Italian government will stick to its European Union budget targets but push the bloc for more measures to relieve the region’s scourge of youth unemployment, Prime Minister Enrico Letta said Thursday during his first trip to Brussels since taking office.BRUSSELS — The Italian government will stick to its European Union budget targets but push the bloc for more measures to relieve the region’s scourge of youth unemployment, Prime Minister Enrico Letta said Thursday during his first trip to Brussels since taking office.
The comments indicate Mr. Letta’s intention to cooperate with E.U. officials in adhering to strict spending policies, even though the measures are opposed by large segments of the political class in Rome. In return, Mr. Letta, who was sworn in last weekend, might hope to obtain flexibility from the authorities in Brussels, who want to keep a moderate pro-European in charge in Rome.The comments indicate Mr. Letta’s intention to cooperate with E.U. officials in adhering to strict spending policies, even though the measures are opposed by large segments of the political class in Rome. In return, Mr. Letta, who was sworn in last weekend, might hope to obtain flexibility from the authorities in Brussels, who want to keep a moderate pro-European in charge in Rome.
The Italian government will “maintain the engagements taken by the previous government” and will present its plans within “the next few days, the next few weeks,” Mr. Letta said at a joint news conference with José Manuel Barroso, the president of the European Commission.The Italian government will “maintain the engagements taken by the previous government” and will present its plans within “the next few days, the next few weeks,” Mr. Letta said at a joint news conference with José Manuel Barroso, the president of the European Commission.
Mr. Letta faces the delicate task of governing in a coalition with former Prime Minister Silvio Berlusconi’s People of Liberty Party. It is the first experiment in power-sharing between the right and left in Italy in decades, and one that his own Democratic Party members had fiercely opposed.Mr. Letta faces the delicate task of governing in a coalition with former Prime Minister Silvio Berlusconi’s People of Liberty Party. It is the first experiment in power-sharing between the right and left in Italy in decades, and one that his own Democratic Party members had fiercely opposed.
Mr. Berlusconi came back from the political dead when his coalition placed second in national elections in February, largely by promising to abolish an unpopular property tax imposed by the government of Prime Minister Mario Monti, whose newly founded political party won less than 10 percent of the February vote. Italy is still struggling to rein in public spending, even as the government is under pressure to eliminate that tax for 2013 and return the 2012 payment, as Mr. Berlusconi wants. But that would leave a hole of €8 billion, or $10.4 billion, in the national budget.Mr. Berlusconi came back from the political dead when his coalition placed second in national elections in February, largely by promising to abolish an unpopular property tax imposed by the government of Prime Minister Mario Monti, whose newly founded political party won less than 10 percent of the February vote. Italy is still struggling to rein in public spending, even as the government is under pressure to eliminate that tax for 2013 and return the 2012 payment, as Mr. Berlusconi wants. But that would leave a hole of €8 billion, or $10.4 billion, in the national budget.
Mr. Letta has promised the Italian Parliament that he will suspend property tax contributions due in June and start a review of the tax, which is worth an estimated €4 billion a year. One of the main questions hanging over the new Italian government is how Mr. Letta would keep the country’s deficit aligned with the E.U. target of 3 percent of gross domestic product if the tax were scrapped.Mr. Letta has promised the Italian Parliament that he will suspend property tax contributions due in June and start a review of the tax, which is worth an estimated €4 billion a year. One of the main questions hanging over the new Italian government is how Mr. Letta would keep the country’s deficit aligned with the E.U. target of 3 percent of gross domestic product if the tax were scrapped.
Despite those uncertainties, Mr. Barroso showered Mr. Letta with praise, saying the commission wanted to remove Italy from its watch list of countries facing an “excessive deficit procedure.” Being left on the list would be a signal to investors that a member state is struggling to abide by budgetary rigor.Despite those uncertainties, Mr. Barroso showered Mr. Letta with praise, saying the commission wanted to remove Italy from its watch list of countries facing an “excessive deficit procedure.” Being left on the list would be a signal to investors that a member state is struggling to abide by budgetary rigor.
“Political stability is back in Italy,” Mr. Barroso said. “I am very confident that it will be possible, provided that now Italy details the measures that it intends to take, that Italy will be able to go out of the excessive deficit procedure,” he said. “But that of course now depends on the presentation in concrete terms of the plans of the new Italian government.”“Political stability is back in Italy,” Mr. Barroso said. “I am very confident that it will be possible, provided that now Italy details the measures that it intends to take, that Italy will be able to go out of the excessive deficit procedure,” he said. “But that of course now depends on the presentation in concrete terms of the plans of the new Italian government.”
The strength of Mr. Letta’s government will depend on his ability to help improve the flagging Italian economy. Unemployment is above 11 percent, with the rate rising to 38 percent for young people, and the small and midsize businesses that are the country’s economic backbone are facing a credit crunch and prohibitively high labor costs.The strength of Mr. Letta’s government will depend on his ability to help improve the flagging Italian economy. Unemployment is above 11 percent, with the rate rising to 38 percent for young people, and the small and midsize businesses that are the country’s economic backbone are facing a credit crunch and prohibitively high labor costs.
On Thursday, Mr. Letta demanded that a meeting of E.U. leaders in June focus on youth unemployment, which he described as the “the real nightmare of my country and the E.U.” It was “important for us to have in June some important signals for European citizens in terms of recovering hope and confidence,” he said.On Thursday, Mr. Letta demanded that a meeting of E.U. leaders in June focus on youth unemployment, which he described as the “the real nightmare of my country and the E.U.” It was “important for us to have in June some important signals for European citizens in terms of recovering hope and confidence,” he said.
Mr. Letta also lent his support to plans drawn up by the commission for a European banking union, which would aim to reduce, or even eliminate, the need for taxpayers to foot the bill for failing banks. A banking union could also help Italian businesses gain access to financing at lower interest rates and would be a sign that Europe can keep to its promises to overhaul important aspects of its economic governance.Mr. Letta also lent his support to plans drawn up by the commission for a European banking union, which would aim to reduce, or even eliminate, the need for taxpayers to foot the bill for failing banks. A banking union could also help Italian businesses gain access to financing at lower interest rates and would be a sign that Europe can keep to its promises to overhaul important aspects of its economic governance.
“We cannot decide things and never see them put them in place,” said Mr. Letta, making a veiled jab at Germany. Last year the government in Berlin strongly supported the creation of the banking union. But Germany has since slowed the process by demanding changes to the E.U.’s treaties before letting the banking structure take effect.“We cannot decide things and never see them put them in place,” said Mr. Letta, making a veiled jab at Germany. Last year the government in Berlin strongly supported the creation of the banking union. But Germany has since slowed the process by demanding changes to the E.U.’s treaties before letting the banking structure take effect.
Mr. Letta’s government, which includes seven female ministers and Italy’s first nonwhite minister, presents a fresh face to the world. Fabrizio Saccomanni, the former director general of the Bank of Italy who is Mr. Letta’s finance minister, has a strong international profile. So does the new foreign minister, Emma Bonino, a Radical Party member and former member of the European Parliament.Mr. Letta’s government, which includes seven female ministers and Italy’s first nonwhite minister, presents a fresh face to the world. Fabrizio Saccomanni, the former director general of the Bank of Italy who is Mr. Letta’s finance minister, has a strong international profile. So does the new foreign minister, Emma Bonino, a Radical Party member and former member of the European Parliament.
As a former member of the European Parliament himself, Mr. Letta is already a familiar figure in Brussels. On Thursday he took the opportunity to demonstrate his European credentials by addressing the news conference in a mixture of fluent French and English as well as his native Italian.As a former member of the European Parliament himself, Mr. Letta is already a familiar figure in Brussels. On Thursday he took the opportunity to demonstrate his European credentials by addressing the news conference in a mixture of fluent French and English as well as his native Italian.
In many ways, Mr. Letta’s government is the triumph of a crumbling political order fighting to maintain its grip on Italy. Mr. Berlusconi wields tremendous veto power and his ministers hold the most delicate domestic portfolios, including the health and infrastructure ministries, which oversee a significant part of the national budget, as well as the portfolios for constitutional reform and simplification.In many ways, Mr. Letta’s government is the triumph of a crumbling political order fighting to maintain its grip on Italy. Mr. Berlusconi wields tremendous veto power and his ministers hold the most delicate domestic portfolios, including the health and infrastructure ministries, which oversee a significant part of the national budget, as well as the portfolios for constitutional reform and simplification.
Mr. Berlusconi’s dauphin, Angelino Alfano, is deputy prime minister and interior minister. Political analysts say that Mr. Berlusconi’s priority is to try to maintain some form of immunity in his many legal entanglements.Mr. Berlusconi’s dauphin, Angelino Alfano, is deputy prime minister and interior minister. Political analysts say that Mr. Berlusconi’s priority is to try to maintain some form of immunity in his many legal entanglements.
The Northern League party has stayed in the opposition, but political analysts say that is largely because it would like control of the parliamentary committee that oversees the secret service. Under the Italian Constitution, that committee must be headed by the opposition, and the establishment is wary of entrusting it to the Five Star Movement of Beppe Grillo, a former comedian.The Northern League party has stayed in the opposition, but political analysts say that is largely because it would like control of the parliamentary committee that oversees the secret service. Under the Italian Constitution, that committee must be headed by the opposition, and the establishment is wary of entrusting it to the Five Star Movement of Beppe Grillo, a former comedian.
Rachel Donadio reported from Rome, where Gaia Piangiani contributed reporting.Rachel Donadio reported from Rome, where Gaia Piangiani contributed reporting.