Rome will burn, regardless of Italian election result

Regardless of who wins next weekend's parliamentary election, Italy's long economic decline is likely to continue because the next government won't be strong enough to pursue the tough reforms needed to make its economy competitive again.

Bankers, diplomats and industrialists in Rome and Milan despair at how Italians are shifting allegiances ahead of the February 24-25 vote to favor anti-establishment upstarts and show disgust with the established parties.

That makes it more likely that no bloc will have the political strength to tackle Italy's deep-rooted economic crisis, which has made it Europe's most sluggish large economy for the past two decades.

Final opinion polls predict that the vote will deliver a working majority in both houses for a centre-left coalition governing in alliance with technocrat former prime minister Mario Monti. Political risk consultancy Eurasia assigns this scenario a 50-60 percent probability.

But Italy's election for both chambers of parliament has the potential to tip the euro zone back into instability if the outcome does not produce that result. Read more >>

Scandal at world's oldest bank

By hiding losses of hundreds of millions of euros, the 540-year-old Monte dei Paschi di Siena has threatened to trip up the leading Democratic Party – to Silvio Berlusconi's benefit.

A scandal engulfing the world’s oldest bank has emerged as a potential game changer in Italy’s national election, threatening to drag down the leading party in the polls and give a critical boost to Silvio Berlusconi’s bid to regain office.

Monte dei Paschi di Siena was founded in 1472, 20 years before Columbus discovered America, but its centuries-old reputation has been severely tarnished by a still-unraveling scandal over derivatives deals worth hundreds of millions of euros and hidden by the bank until brought to light in recent days.

The derivative deals could cost the 540-year-old bank losses of up to 720 million euros ($970 million). What makes it so politically damaging is the banks ties to the center-left Democratic Party. Read more >>

One million protest against Italy's austerity cuts

irishtimes.com

ROME – Italians marched through cities and towns in a general strike protesting an austerity budget they say bleeds workers but spares the rich.

The left-leaning CGIL union called the strike in an effort to force prime minister Silvio Berlusconi’s government to redraft a €25 billion austerity package he says is an essential part of European efforts to save the currency.

The website of the CGIL, Italy’s largest union, said more than one million people took part in various demonstrations in large and small cities around the country.

About 100,000 people, according to union estimates, demonstrated in the central city of Bologna, capital of a traditionally leftist area with a strong labour movement.

In Rome, a long line of protesters blowing whistles and waving red CGIL flags snaked past the Colosseum. Organisers put the turnout at 40,000 people.

In Milan, the CGIL said 80,000 attended a rally, but police estimated the figure at 35,000.

Many of Friday’s marchers also bore placards against car maker Fiat, which is wrangling with unions over plans to improve labour productivity at a plant in southern Italy.

“We say No to this budget. It is wrong, unjust, it stunts growth, it does not kick-start production, it doesn’t touch the rich and it punishes workers,” said union leader Fulvio Mammoni to a crowd of tens of thousands in Naples.

After months of telling Italians they were immune to a Greek-style debt crisis, Mr Berlusconi’s cabinet in May approved an austerity plan, including cuts to funding for municipalities and freezing of public sector salaries.

The government said a random poll of 30 per cent of state workers showed that fewer than 3 per cent of them had heeded the strike call as of early yesterday afternoon.

Support for the stoppage seemed mixed in some areas, despite the union’s judgment that adherence was “massive”. Several bus and metro services in Rome still ran.

The strike was a test of strength for Mr Berlusconi, whose poll ratings have sunk to new lows as unemployment has risen and the euro zone’s third largest economy has struggled to emerge from its worst post-second World War recession.

The strike has split Italy’s trade union movement, which is divided along political lines. The other two main unions have asked their members to stay on the job.