Italy in spotlight as new PM Monti unveils plans

Italy's new Prime Minister Mario Monti is set to unveil his economic crisis plan Thursday, under heavy scrutiny from global leaders, financial markets and parliamentarians wary of hard-hitting reforms. Monti, who has promised to "race" to implement initiatives demanded by the eurozone, is likely to offset planned austerity measures with new stratagems for growth, social cohesion and youth unemployment, Italian media said. Thousands of students took to the streets in Italian cities ahead of his speech. In Milan, they threw flares at riot police during protests against a technocratic government they fear will act in favour of fat cats and bankers. "We are not merchandise in the hands of politicians and bankers. People before Profit!" read banners at a procession which blocked traffic in Palermo. The new cabinet, sworn in Wednesday under intense pressure from financial markets and global leaders, faces a confidence vote in the Senate at 1930 GMT on Thursday, before another in the lower house on Friday. Monti, who replaced the billionaire media mogul Silvio Berlusconi as premier, is expected easily to win the votes, but could face a political backlash when he begins implementing painful and long-delayed economic reforms. To counter criticism over "sacrifices" Italians will be forced to make, the former Eurocrat insisted his new cabinet include a super ministry of economic development, transport and infrastructure charged with boosting growth. The new minister at its helm, Corrado Passera, who is chief executive of Italy's biggest retail bank Intesa Sanpaolo, said "Italy is worth more than the markets think" and that his aim was "sustainable development and new jobs." Monti's economic reforms will be "the first step in an operation to restore credibility lost under Berlusconi," the Repubblica daily said. He faces his first international test next week, when he is expected to travel to Brussels, Berlin, Paris and London, it said. Italy's economic commentators sounded a cautious note. While the Stampa newspaper acclaimed a cabinet of technocrats "with a political brain" capable of managing the crisis, the Corriere della Sera warned Monti has "lost a lot of time" and must convince Italians to "work like ants." Loretta Napoleoni, an economic analyst for Il Fatto Quotidiano newspaper who teaches at Cambridge University, said Monti risked obeying the European Union's orders unquestionably, throwing Italy into "the worst recession since 1929." While Monti has won endorsements from all of Italy's main political forces so far, he faces a major challenge in steering a course through a fractious political world, with particularly intense sniping from Berlusconi allies. The soft-spoken economist appears, however, to have already garnered the support of more than half of Italians, according to a poll by IPR Marketing. German Chancellor Angela Merkel congratulated him on his appointment Thursday and urged him to move fast to implement "crucial" reforms. Eurogroup chief Jean-Claude Juncker rang Monti ahead of the speech to insist on the EU's "full confidence" in Italy's ability to overcome the current crisis and confirmed the meeting in Brussels next week. Tense markets had fluctuated before and after Monti's nomination, with the rate on Italian 10-year government bonds hovering around the 7.0-percent warning threshold that set off alarm bells around Europe and beyond. Milan's stocks were down on Thursday, in line with other European markets. Italy has to issue 440 billion euros (about $590 billion) in debt next year, according to the main public debt representative in the Italian Treasury, Maria Cannata, who said it would be "more complicated" because of market volatility. The country has a debt mountain of 1.9 trillion euros ($2.6 trillion). Despite a 10-year stint in Brussels, Monti never held office in Italy but has already shown his mettle by insisting his government has to stay in power until 2013 -- the scheduled date for the next general election. Berlusconi, who has vowed a comeback, stepped down on Saturday following intense market pressure. His resignation was met by cries of "Buffoon!" and "Mafioso!" as overjoyed Italians partied and danced in the streets of Rome. On his last day in office, his singer friend Mariano Apicella released an album of love songs written by the outbound premier. "Stay, and leave me your heart," says one lyric. Another says: "I adore you and I already miss you."