What can the UK expect from the incoming Italian prime minister?
By Matthew Champion
By Friday Mario Monti's extraordinary rise from non-politician to prime minister of the world's seventh largest economy should be complete. His ascent is in stark contrast to the fall of the man he is replacing, Silvio Berlusconi, Italy's longest-serving post-war prime minister who resigned on Saturday. With Britain's hopes of a eurozone recovery based in no small part on Monti's ability to restore investor confidence in Italy, Downing Street will be taking a keen interest in the economist's fortunes.
Obvious contrasts in personality and lifestyle between the Monti and Berlusconi have already been highlighted. Whereas Berlusconi was a flamboyant former cruise ship singer who amassed a vast construction and media empire and earned notoriety for his so-called 'bunga-bunga' parties and dalliance with attractive young women, Monti is a thoughtful Eurocrat economist with a peerless academic background and a reputation for tackling some of the world's biggest corporations.
Monti, born in Varese in 1943, holds degrees in economics from Milan's Bocconi University and Yale in the US. At Yale he studied under James Tobin, the Nobel prize-winning economist who created and lent his name to the Tobin tax on financial transactions.
After lecturing at the University of Turin for 15 years he returned to Bocconi in 1985, where four years later he would become rector. In 1994 he was nominated, by then prime minister Berlusconi, for the role of European commissioner for internal markets, services, customs and taxation.
It was not until 1999 and his appointment to hold the brief of competition that Monti's reputation truly flourished.
During a five-year spell he blocked the $45 billion merger of Honeywell and General Electric; hamstrung Germany's Landesbanken; compelled France to break up its utility monopolies; and fined Microsoft €497 million in an anti-trust case that found the software giant guilty of abusing its market position. It was during this time that Monti acquired the nickname Super Mario.
Since leaving the EC he set up the Bruegel group and became a leading member of Friends of Europe, another EU thinktank. He also acted as an international advisor to Goldman Sachs and became a member of Coca-Cola's advisory board.
Addressing the Italian media for the first time as prime minister designate this weekend, Monti said his aim was to build a "future of dignity and hope" for future generations. This week he is holding two days of talks with political parties, trade unions and federations before announcing his cabinet by around Wednesday. Centre and centre-left parties in the Italian parliament have mostly pledged their support for the 68-year-old incoming PM, while Berlusconi's former right-wing allies the Northern League have so far withheld their backing.
While Monti's new government is likely to enjoy a brief honeymoon period, the most significant response to a change of leadership has been joy at Berlusconi's exit by his detractors.
Berlusconi's shock demise came after the yield on Italian bonds rose to more than seven per cent; a level that once reached led to bailouts in Portugal, Ireland and Greece. Although the yield has now fallen back to under 6.5 per cent, the eve of Monti's accession was accompanied by the passing of austerity measures worth almost €60 billion, including the sale of state property, a freeze on public sector salaries and measures to combat tax evasion.
Italy is thought to have state assets of up to €1.8 trillion, including gold reserves worth €115.28 - one of the largest in the world - compared to its total debt of around €1.7 trillion. Monti's management of the debt crisis - which arguably conceals a productivity crisis (labour competitiveness against Germany has fallen by up to 40 per cent over the last 15 years) - will evidently be the defining moment of his nascent government.
Monti is clearly favoured in financial circles, but it remains to be seen how everyday Italians will react to a technocratic non-politician prime minister whose legitimacy is so far derived from the upper echelons of the EU hierarchy and mandate from the unpopularity of the man who he has now replaced.
Despite the constant scandals, allegations of criminal wrongdoing and repeated diplomatic gaffes, Berlusconi was able to stay in power through a skilful manipulation of political allies and enemies. Monti will have to manage both, on the domestic and international stages, during a crisis that German chancellor Angela Merkel describes as Europe's most difficult hour since the second world war.