Analysis: Mario Monti’s nerves begin to fray

STORM clouds are gathering over Mario Monti’s efforts to transform the Italian economy, with his approval ratings dropping, mounting protests against his reforms and a damaging row with the parties that sustain him in parliament.

Mr Monti shot out of the blocks after being appointed prime minister in November and quickly implemented tough austerity measures to fend off the debt crisis.

However, he now risks running into political quicksands as he attempts to revive a stagnant economy.

A labour reform that is at the centre of his programme has hit strong opposition, forcing him to abandon immediate implementation and accept a parliamentary debate that will delay the law for months and could lead to it being diluted.

The reform has also caused rifts in the centre-left Democratic Party, his second-biggest parliamentary backer, destabilising the alliance on which he depends to govern.

Italy’s borrowing costs, which fell sharply after Mr Monti took power, have also begun to creep upwards recently, reflecting in part the increased political uncertainty.

The premier was widely criticised by both politicians and commentators in Italy yesterday for an outburst against the parties from Japan, where he was on an Asian tour intended to drum up foreign investment.

Mr Monti told reporters: “The government enjoys high support in opinion polls, the parties do not.”

This followed remarks in South Korea where he threatened to step down if the parties and trade unions did not like the job his administration was doing.

Both remarks betray Mr Monti’s irritation at political sniping and opposition to his measures, particularly the key labour reform.

They also mark a departure from the statesmanlike demeanour he adopted earlier in the year when he never lost an opportunity to laud the parties’ sense of responsibility.

His problem is that the easing of debt pressure and his own stumbles over the reform have left space for a revival of political squabbling between the grand coalition’s right and left, which will make future reforms more difficult and revive anxiety in financial markets.

None of this suggests his days are numbered, only that they may be more difficult from now on.

• Barry Moody is Southern Europe editor at Reuters