Mario Monti spoke to MPs as anti-austerity protests turned violent in Milan, Turin and Naples, signalling the depths of resistance the economist-turned-premier will have to overcome if his plan is to succeed.
He framed the situation in dire terms – if Italy cannot save itself, the 17-nation eurozone of which it is a founding member would be in catastrophic danger.
“The end of the euro would cause the disintegration of the united market, its rules, its institutions,” the former European Union competition commissioner told the senate ahead of a confidence vote on his one-day-old government. “The future of the euro also depends on what Italy will do in the next weeks.”
Europe has already bailed out three countries – Greece, Ireland and Portugal – but the Italian economy, the third-largest in the eurozone, is too big for Europe to rescue.
Italy’s role in the eurozone is considered crucial for economic and political reasons – but it’s not clear how many sacrifices Italians are willing, or able, to make.
Riot police in Milan clashed with egg-throwing students who tried unsuccessfully to march to Bocconi University, which educates Italy’s business elite. Mr Monti is Bocconi’s president.
“The government of the banks” read one placard held by a youth. “Save schools, not banks!” read one banner raised by students in front of the Association of Italian Banks. Demonstrators chanted “Association of Italian bankrupters!”
Rome protester Titti Mazzacane was sceptical, even as she called Mr Monti’s ministerial appointments “decent and competent people.”
“[His government] is a little bit too free-market liberal. I am a bit scared,” said the 53-year-old teacher.
Mr Monti revealed plans to fight Italy’s pervasive tax evasion, lower costs for companies so they can employ more and possibly lower taxes rates for women to encourage their increased participation in the work place. He warned Italians they must brace for more “sacrifices,” including the probable return of a property tax on primary residences.
“We must convince the markets we have started going down the road of a lasting reduction in the ratio of public debt to GDP. And to reach this objective we have three fundamentals: budgetary rigour, growth and fairness,” Mr Monti said.
He said he would quickly work to lower Italy’s staggering public debt, which now stands €1.9 trillion (£1.6tn) – 120 per cent of GDP.
“But we won’t be credible if we don’t start to grow,” he added.
Italy’s lack of a property tax on primary residences – Silvio Berlusconi eliminated the tax – is “a peculiarity, if not an anomaly” in Europe, Mr Monti said.
He also pledged to tackle tax evasion. Hiding or under-reporting income is rampant in Italy.
Stefano Folli, a political analyst at the Il Sole-24 Ore newspaper, viewed Mr Monti’s overture as more political than economic, aimed at convincing Italians and the international community of his aims.
“The anti-crisis discussion was aimed at Italians to seek a season of sacrifices and rigour, and abroad to say Italy wants to gain credibility,” Mr Folli said.