Italian Prime Minister Silvio Berlusconi said he alone can deliver the country’s promised deficit cuts as European leaders turn their attention to his government’s ability to help contain the debt crisis.
In an interview published in Corriere della Sera Sunday, Berlusconi ruled out early elections and said the current legislature in Rome will last until 2013. He said the European Central Bank’s support will be maintained only if his government follows through on measures to rein in debt and promote growth.
“Only I and my government can achieve this reform program for 18 months, which is why there is no way for me to stand aside,” the Italian leader said in the interview.
The European Union’s latest package of measures failed to stem a rise in Italian borrowing costs, with an Oct. 28 bond sale sending yields to a euro-era record and denting the euphoria triggered after the EU summit. Group of 20 leaders will convene in Cannes, France, this week after an agreement to bolster Europe’s rescue fund to 1 trillion euros ($1.4 trillion) and persuaded bondholders to incur 50 percent losses on Greek debt.
Days after the euro area’s 14th crisis summit in 21 months sent the euro to its biggest one-day gain in more than a year, German Finance Minister Wolfgang Schaeuble warned against inflated expectations, saying more such meetings are to come. He repeated a warning to Italy to execute reform measures.
Readiness for Reform
“Italy has signaled its readiness for reforms -- now they have to be implemented,” Schaeuble told Der Spiegel in an interview published Saturday. “Announcements alone don’t help.”
Berlusconi will present commitments made to European leaders on Nov. 9 and 10, the newspaper said. He also said there was “no deal” with Umberto Bossi, leader of the Northern League party, to resign and hold early elections in return for an agreement to increase the retirement age, as reported on Oct. 26 in newspaper la Repubblica.
The Rome-based Treasury on Oct. 28 sold 3.08 billion euros of 2014 bonds to yield 4.93 percent, the highest since November 2000. The same day, the euro retreated 0.3 percent to $1.4147 after jumping 2 percent the previous day. The Euro Stoxx 50 Index slid 0.6 percent following a 6 percent surge the day euro leaders reached their agreement.
European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy have written to the G-20 “to summarize and explain Europe’s comprehensive crisis response” ahead of their summit in Cannes this week.
“We will implement these measures rigorously and in a timely manner, and we are confident that they will contribute to the swift resolution of the crisis,” the letter, issued Sunday, said. “Whilst we in Europe will play our part, this cannot alone ensure global recovery and rebalanced growth. There is a continued need for joint action by all G-20 partners in a spirit of common responsibility and common purpose.”
European officials began to seek contributions to a prospective fund from countries with bulging reserves such as China, Brazil and Japan. Chinese Vice Finance Minister Zhu Guangyao said Oct. 28 that his government wants more details about the “technicalities” before making any decision on investing in the European Financial Stability Facility.
China as ‘Savior’
China can’t play the role of “savior” to Europe, nor provide a “cure” for the region’s malaise, the official Xinhua news agency said in an English-language commentary. The rescue package announced Oct. 27 is just the start of a long and difficult process to solve Europe’s debt crisis for good and more concerted efforts are needed, the commentary said.
The success of European measures also depends on the Greek debt writedown. Charles Dallara, managing director of the Institute of International Finance and chief negotiator for the lenders, said he’s “very optimistic that more than 90 percent will participate,” he told Welt am Sonntag newspaper Sunday.
Germany’s Schaeuble issued a warning to the banks in Der Spiegel, saying that while the EU prefers a “voluntary” agreement on Greek debt, a “less consensual path is also possible.”
Greek Prime Minister George Papandreou faces the challenge of maintaining consensus on budget austerity and job cuts amid protests and languishing growth. As he prepares to meet with legislators Monday, a poll published in To Vima newspaper showed that most Greeks have a negative view of the EU accord.
© Copyright 2022 Bloomberg News. All rights reserved.