By ELISABETTA POVOLEDO
Published: November 13, 2011
Stefano Rellandini/Reuters Mario Monti, Italy's newly appointed prime minister, is a widely respected and well-connected economist, but he faces a daunting task.
ROME — In the news media he is known simply as “Super Mario.” But Mario Monti, the likely leader of Italy’s new government, which is being formed amid a crisis that threatens the European monetary union itself, will face a strong challenge in living up to his admiring nickname as he tries to steer his country from the brink of economic turmoil and through the machinations of Italian politics.
The consensus in Italy is that President Giorgio Napolitano, who nominated Mr. Monti in record time on Sunday to replace departing Prime Minister Silvio Berlusconi, had chosen judiciously, picking an economist with strong European credentials and longstanding familiarity with Europe’s power brokers.
It remains to be seen, however, whether Mr. Monti — who has no hands-on political experience at home — can convince financial markets that he can overcome Italy’s snarled domestic politics and implement the cost-saving measures that Italy has promised to whittle down a mountain of debt and boost growth.
“Mr. Monti brings credibility and legitimacy, but also the notion that if he fails and his efforts fail, everyone will be worse off,” said Moisés Naím, a senior associate in the international economics program at the Carnegie Endowment for International Peace in Washington, who knows Mr. Monti. “The bottom line is that Italians have lost their alibi once Berlusconi is gone and the hard work starts; there are no excuses any more.”
Mr. Monti, 68, is as much an outsider to Rome’s political palazzi as he is at home in Milan, where he taught political economy and is president of Bocconi University. He is also at home in Brussels, where he spent more than a decade as a member of the European Commission, first for the internal market and then for competition.
“He was really shaped by the two portfolios he held at the Commission, which are the fundamental pillars of the E.U.,” said Jean Pisani-Ferry, the director of Bruegel, an economics research institute in Brussels. Mr. Monti was Bruegel’s first chairman and is now its honorary president.
Mr. Monti’s tenure as commissioner for competition coincided with an eventful time in European Union antitrust enforcement and control of market concentrations. He also worked with United States authorities to create the International Competition Network.
He blocked the $42 billion merger of General Electric and Honeywell and fined Microsoft $650 million for antitrust violations. He also ordered seven German regional public banks to repay more than 3 billion euro in illegal subsidies they received from their regional governments in the 1990s.
“He was not afraid to take on iconic businesspeople like Jack Welch,” General Electric’s former chief executive, said Nicholas Levy, an antitrust lawyer at Cleary Gottlieb Steen & Hamilton, who dealt with Mr. Monti on several occasions, and remembered him as “extraordinarily courteous, and a good listener who approached his job with care for the subject matter,” paying attention to details and understanding the facts.
After the General Electric decision, The Economist magazine published an article saying, “Many American businessmen have regarded Mario Monti as the corporate equivalent of Saddam Hussein.”
A series of court rulings overturned three of Mr. Monti’s other merger decisions, but his response, Mr. Levy said, “served as a catalyst for change, and formed the basis of his legacy.” He enlisted the help of economists as well as lawyers to help shape the regulations to guide the competition commission.
Italians can expect Mr. Monti to act in support of market integration, which he believes will make Italy — and the European Union — more resilient to crises. “He holds that the monetary union has to be based on market integration, openly competing within the euro single market,” Mr. Pisani-Ferry said.
They can also expect Mr. Monti to push for the reform-minded agenda demanded by the International Monetary Fund, the European Commission and the European Central Bank to make Italy more competitive, and spur the growth that has eluded it in the past decade. Those reforms would include enforcing — and possibly strengthening — measures passed by the Italian Parliament on Saturday that aim to eliminate some structural obstacles to Italian competitiveness, like cumbersome red tape or its entrenched professional guilds.
Though his last official post in Brussels dates to 2004, he remains linked to the city through various organizations like Bruegel, and the Reflection Group, which was established by the European Council to examine long-term issues facing the European Union.
Two years ago he wrote a report for the commission’s president on the European Union’s single market and options for stimulating growth. “I think very few of the other prime ministers have the same degree of commitment to Europe that he has,” Mr. Pisani-Ferry said. “He’s a strong believer in Europe; for him it’s a matter of principle, not a matter of expediency.”
And his contacts guarantee that he can count on the counsel of players who count in Europe’s major institutions.
On Saturday morning, Mr. Monti met with the new president of the European Central Bank, Mario Draghi.
The bank, first under Jean-Claude Trichet and now Mr. Draghi, has worked to keep the crisis over the euro from damaging Italy too deeply. It has bought the country’s bonds in a bid to keep Italy’s interest rates below levels that forced Greece, Portugal and Ireland to seek bailouts.
Mr. Monti was born in Varese, the son of a banker. He studied economics and business at Bocconi, and later did graduate work at Yale University, where he studied under James Tobin, the Nobel Prize-winning economist who called for the taxation of foreign currency transactions.
In Milan, besides staking his place at the heart of one of Italy’s most respected universities, he sat on the board of several Italian companies.
Recent newspaper articles described Mr. Monti as being as self-effacing as Mr. Berlusconi was flamboyant.
“He’s got a statesmanlike grace that is reassuring in a way that few politicians have,” Mr. Levy said.
Mr. Monti is also an international adviser to Goldman Sachs, and was president of the Italian Group of the Trilateral Commission, an organization described in his blog by Piergiorgio Odifreddi, an Italian mathematician and writer, as “ultra-liberal American, European and Japanese Masonry inspired by David Rockefeller.”
Some in the Italian news media have begun referring this week to the dawn of an era of “Government Sachs.” Like Mr. Monti, Mr. Draghi worked for the global investment bank, as did Greece’s new prime minister, Lucas Papademos.
“I see Monti and his team knowing what needs to be done,” said Mr. Naím of the Carnegie Endowment. “Italy is the most overdiagnosed country in the world.”
But if the diagnosis is straightforward, a cure may be less so. “No one wants to bear the costs of the reforms,” Mr. Naím said. “He will have to be a hell of a politician to pull off measures that are needed. And politicians will have to make similar decisions.”
Mario Monti, Italy’s New Leader, Faces Uphill Fight - NYTimes.com
