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Italy’s New Leader Reassures European Leaders on Budget

May 3, 2013 by Leave a Comment

The comments indicate Mr. Letta’s intention to cooperate with E.U. officials in adhering to strict spending policies, even though the measures are opposed by large segments of the political class in Rome. In return, Mr. Letta, who was sworn in last weekend, might hope to obtain flexibility from the authorities in Brussels, who want to keep a moderate pro-European in charge in Rome.

The Italian government will “maintain the engagements taken by the previous government” and will present its plans within “the next few days, the next few weeks,” Mr. Letta said at a joint news conference with José Manuel Barroso, the president of the European Commission.

Mr. Letta faces the delicate task of governing in a coalition with former Prime Minister Silvio Berlusconi’s People of Liberty Party. It is the first experiment in power-sharing between the right and left in Italy in decades, and one that his own Democratic Party members had fiercely opposed.

Mr. Berlusconi came back from the political dead when his coalition placed second in national elections in February, largely by promising to abolish an unpopular property tax imposed by the government of Prime Minister Mario Monti, whose newly founded political party won less than 10 percent of the February vote. Italy is still struggling to rein in public spending, even as the government is under pressure to eliminate that tax for 2013 and return the 2012 payment, as Mr. Berlusconi wants. But that would leave a hole of €8 billion, or $10.4 billion, in the national budget.

Mr. Letta has promised the Italian Parliament that he will suspend property tax contributions due in June and start a review of the tax, which is worth an estimated €4 billion a year. One of the main questions hanging over the new Italian government is how Mr. Letta would keep the country’s deficit aligned with the E.U. target of 3 percent of gross domestic product if the tax were scrapped.

Despite those uncertainties, Mr. Barroso showered Mr. Letta with praise, saying the commission wanted to remove Italy from its watch list of countries facing an “excessive deficit procedure.” Being left on the list would be a signal to investors that a member state is struggling to abide by budgetary rigor.

“Political stability is back in Italy,” Mr. Barroso said. “I am very confident that it will be possible, provided that now Italy details the measures that it intends to take, that Italy will be able to go out of the excessive deficit procedure,” he said. “But that of course now depends on the presentation in concrete terms of the plans of the new Italian government.”

The strength of Mr. Letta’s government will depend on his ability to help improve the flagging Italian economy. Unemployment is above 11 percent, with the rate rising to 38 percent for young people, and the small and midsize businesses that are the country’s economic backbone are facing a credit crunch and prohibitively high labor costs.

On Thursday, Mr. Letta demanded that a meeting of E.U. leaders in June focus on youth unemployment, which he described as the “the real nightmare of my country and the E.U.” It was “important for us to have in June some important signals for European citizens in terms of recovering hope and confidence,” he said.

Mr. Letta also lent his support to plans drawn up by the commission for a European banking union, which would aim to reduce, or even eliminate, the need for taxpayers to foot the bill for failing banks. A banking union could also help Italian businesses gain access to financing at lower interest rates and would be a sign that Europe can keep to its promises to overhaul important aspects of its economic governance.

Article source: http://www.nytimes.com/2013/05/03/business/global/03iht-euitaly03.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Italian Lawmakers, After Stalemate, Re-elect President to Second Term

April 20, 2013 by Leave a Comment

The move raised the possibility that Mr. Napolitano could preside over the creation of a broad-based coalition after inconclusive national elections in February split Parliament into three intractable factions and failed to yield a government even as Italy’s economy continues to stumble.

The election of Mr. Napolitano, supported by both the main center-left and center-right parties, suggested that the two sides might be more willing to negotiate the formation of a government. But it also infuriated the anti-establishment Five Star Movement of Beppe Grillo that won a quarter of the recent parliamentary vote.

Mr. Grillo called his supporters to the streets on Saturday to protest, saying the re-election did not represent the change that Italians had seemed to demand. While he cannot prevent a grand coalition from forming, Mr. Grillo could complicate the situation by stirring renewed anger against the old political establishment, which is in upheaval.

Mr. Napolitano’s existing seven-year term is up in May. Lawmakers on Saturday implored Mr. Napolitano to stand for president after failing to cohere around a candidate acceptable to a majority of Parliament in two days of voting, and after the implosion on Friday of the center-left Democratic Party.

“I cannot dismiss my responsibility toward the nation,” Mr. Napolitano said before the vote, which made him the first second-term president in Italy’s 67-year-old republic. But he added that he expected the political parties that had called on him would show “a corresponding sense of responsibility.”

“We must look at the difficult situation of the country, the problems of Italy and Italians and the image and the institutional role of this country in the world,” he said in a televised statement after the vote and a meeting with the presidents of the Lower House and the Senate.

Although a testament to the respect he commands among all parties, Mr. Napolitano’s candidacy was a controversial solution that underscored the profound difficulties Italy’s established parties face in adapting to new economic and social realities.

His candidacy was “not a sign of health of the Italian political system, even if the effect could be positive,” said Antonio Polito, a political commentator. “Our system is no longer able to produce a stable government. The parliamentary system is broken, and it has not been able to fix itself.”

Mr. Napolitano said in his statement that a possible government had not been discussed, but political analysts saw the likelihood of a grand coalition. Such a government would most likely exist as long as it takes to push through urgent economic measures and some critical reforms, including a new electoral law.

If the currently antagonistic parties do not come together, Mr. Napolitano could also dissolve Parliament and call new elections, though analysts said that was less likely because new elections would probably produce a similar result unless the electoral law was changed.

In November 2011, Mr. Napolitano helped orchestrate the rise to power of the current caretaker prime minister, Mario Monti, after former Prime Minister Silvio Berlusconi stepped down during a period of intense market turmoil. Mr. Monti’s yearlong technocratic government ended in December when Mr. Berlusconi’s party withdrew support, and national elections were held in February.

The Democratic Party won a majority in the Lower House but not in the Senate, and its leader, Pier Luigi Bersani, had rejected Mr. Berlusconi’s proposal for a grand coalition.

But in a dramatic defeat, Mr. Bersani stepped down late Friday evening after rebels broke ranks and voted against the two presidential candidates proposed by the Democratic Party leadership. His resignation may lead to new leadership that might be more open to sharing power with Mr. Berlusconi’s party, a prospect that has split the left.

Elisabetta Povoledo reported from Rome, and Rachel Donadio from Athens.

Article source: http://www.nytimes.com/2013/04/21/world/europe/italian-lawmakers-hoping-for-coalition-urge-napolitano-for-re-election.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Euro Watch: Italian Political Turmoil Weighs on Markets

December 10, 2012 by Leave a Comment

Former Prime Minister Silvio Berlusconi said he would again seek Italy’s highest office, leading Mario Monti, the unelected official who currently holds the office, to say he would step down.

Mr. Monti has restored Italy’s credibility with investors, giving the country a break on its borrowing costs. But those gains have come at the cost of painful austerity measures that have worsened the country’s economic situation, and given Mr. Berlusconi an opening to attack.

Mr. Monti will leave after Parliament passes a budget this month and may contest national elections against Mr. Berlusconi, with the vote — previously scheduled for April — now possible as early as February or March.

Mr. Berlusconi, a four time prime minister, left office a year ago as markets pushed Italy to the brink of financial collapse.

The Milan benchmark MIB index was down 3.6 percent in the early European afternoon, with trading halted in the shares of two banks, Monte Paschi and Banca Popolare di Milano, after they fell by their maximum daily limit.

The yield gap, or spread, between Italian 10-year sovereign bonds and equivalent German securities, the European benchmark for safety, grew to 3.61 percentage points Monday from 3.25 points late Friday, suggesting that investors were growing more wary of holding Italian debt. Italian 10-year bonds were trading to yield xxx by midday Monday.

A barometer of euro zone blue-chip stocks, the Euro Stoxx 50 index, fell 1.1 percent. The euro was little changed from its levels in New York Friday, at $1.2907.

“It’s as if a tank moved through” the market, said Mario Sechi, editor in chief of the Rome daily Il Tempo, speaking on Radio 24 on Monday morning. Like many Italian commentators, Mr. Sechi expressed reservations about Mr. Berlusconi’s decision to return to politics.

A dismal economic report Monday served as a reminder that despite Mr. Monti’s success with investors, the real economy continues to suffer. Italian industrial production fell a seasonally adjusted 1.1 percent in October from September, and by 6.2 percent from a year earlier, the national Istat statistics agency reported from Rome.

The coming Italian election “remains high on our list of tail risks for 2013,” Holger Schmieding, an economist in London with Berenberg Bank, wrote in a research note. “A Berlusconi campaign against ‘German austerity’ could potentially unsettle markets,” he noted, and possibly push Spain or Italy into a bailout and additional bond purchases by the European Central Bank to hold down borrowing costs.

Spanish bonds also came under renewed pressure following Mr. Monti’s announcement, with the risk premium demanded by investors for holding Spanish 10-year bonds rather than equivalent German bonds rising to 4.38 percentage points on Monday morning, from 4.16 points on Friday.

Luís de Guindos, the economy minister, warned that Italy’s political turmoil would have an impact on Spain. “When doubts emerge over the stability of a neighboring country like Italy, which is also seen as vulnerable, there’s an immediate contagion for us,” he said Monday morning on Spanish national radio.

Asked whether Spain would itself seek further European rescue funding, the minister instead said that “the help that Spain needs is that the doubts over the future of the euro be removed.”

Speaking ahead of the Nobel prize awards on Monday, the European Commission president, José Manuel Barroso, said that Italy had to “continue on the road of structural reforms.” The elections, Mr. Barroso said on Sky News, “must not be used to postpone reforms.”

David Jolly reported from Paris. Raphael Minder contributed reporting from Madrid.

Article source: http://www.nytimes.com/2012/12/11/business/global/11iht-eurozone11.html?partner=rss&emc=rss

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Memo From Berlin: In Germany, Weighing Debt Relief Against Debt Reduction

November 28, 2012 by Leave a Comment

While Germany has tried to hold the line at providing loan guarantees, most economists say the Continent’s lingering troubles will never be resolved without a reduction in the overall debt load, particularly in Greece, a costly and unpopular step. Led by Chancellor Angela Merkel, Germany has instead preached austerity, even as public-spending cuts have deepened recessions in the periphery, actually increasing the debt load as a percentage of gross domestic product.

Early on Tuesday, finance ministers from the euro zone and the International Monetary Fund, meeting for the third time in three weeks, cobbled together yet another stopgap solution for Greece. Their debt relief measures — lowering interest rates on some debt, lengthening deadlines for debt payments, buying back debt and handing profits on Greek bonds bought by the European Central Bank back to Athens — amounted to a kind of backdoor debt forgiveness.

While the measures seemingly ensured that Greece would receive its next portion of aid, avoiding a short-term meltdown and keeping Athens afloat for the near future, they were immediately criticized as insufficient. “They did not solve a single problem in any long-term way,” said Lüder Gerken, head of the Center for European Policy in Freiburg, Germany. “They merely agreed to buy a little time for a lot of money.”

But time may be exactly what Ms. Merkel wants — 10 months to get past national elections in the fall and into a coalition with the Social Democrats, who have supported bailouts and even the jointly issued debt known as eurobonds. That might free her hands to take more far-reaching steps to address the crisis, as her finance minister, Wolfgang Schäuble, hinted during the negotiations leading to this week’s agreement — and his opponents acknowledged, sardonically.

“The debt cut has not been avoided, it has been postponed to a time after the parliamentary elections,” said Frank-Walter Steinmeier, parliamentary leader of the left-leaning Social Democrats, speaking on ZDF German Television on Tuesday. “We are realistic and try to tell the people honestly and sincerely what’s going on. Schäuble and the present government try once more to finagle their way around the truth.”

Greece’s debt is now more than 170 percent of economic output, a figure that will only grow as the country’s economy continues to contract. Reducing the country’s debt to the sustainable levels required by the International Monetary Fund “means with certainty a debt reduction later on, because the goal can’t be reached any other way,” said Claudia Schmucker of the German Council on Foreign Relations.

“That’s also clear to the federal government, even if they continue to reject it publicly,” she added.

Mr. Schäuble did exactly that, saying at a news conference in Berlin that “it was clear to everyone, including the I.M.F.,” that debt forgiveness “is no solution for the problem.” Mr. Schäuble instead repeated the line popular with the German electorate that only Greek discipline could fix the country’s problems.

“If Greece does not implement the necessary difficult reforms and adjustment measures step by step itself, then it’s a mission impossible,” Mr. Schäuble said. But those very austerity measures have been part of the vicious circle that has driven the Greek economy into a depression.

German policy makers have had plenty of chances in the past three years to give in and tell the public that many of the billions they have guaranteed are already lost, but they have not done so.

Yet the German public, after years of debate, may be a bit savvier than politicians are giving it credit for. “There has to be a debt cut,” said Jochen Slotta, 57, a taxi driver out for a stroll here on Tuesday. “Greece can’t get back on its feet any other way, but the politicians just don’t want to say it, that’s all, because then they won’t be re-elected.”

But there are legal concerns as well as political ones. The powerful and influential German Constitutional Court might strike down a haircut for public-sector debt holdings for violating the no-bailout clause. There are also concerns that other program countries like Ireland and Portugal would demand similar concessions.

“Our endeavor was to prevent sending the wrong signal that a public-sector debt cut would represent, reducing the pressure to make adjustments not just for Greece but for all the program countries,” said Norbert Barthle, a senior member of the Ms. Merkel’s party.

Tuesday’s agreement is expected to pass the German Parliament easily because of the support of the Social Democrats and the Greens. It is in the ranks of Ms. Merkel’s own coalition of conservative Christian Democrats and pro-business Free Democrats that many of the staunchest opponents to further bailouts and debt relief stand. Opinion surveys suggest that the likeliest coalition after next year’s elections would be the so-called grand coalition with the Social Democrats, which would give Ms. Merkel a broad majority and perhaps even the mandate she would need for unpopular decisions.

As the Greek debt talks grind on, a familiar pattern has come to the fore once again: it all comes down to trade-offs between what is good for Greece and the euro and what is good for Ms. Merkel and her party in domestic German politics. Every arithmetic calculation of interest and principal over Greece’s unmanageable debt burden is matched by yet another political recalibration of the latest surveys over attitudes among German voters.

“I don’t think that Merkel right now is prepared to go ahead and tell the Germans, ‘Folks, this costs us some billions and say goodbye to them,’ ” said Thomas Risse, professor of international politics at the Free University in Berlin. “The issue is really when to tell the Germans how much money we actually lost.”

Chris Cottrell contributed reporting from Berlin, and Rachel Donadio from Rome.

Article source: http://www.nytimes.com/2012/11/28/world/europe/in-germany-weighing-debt-relief-against-debt-reduction.html?partner=rss&emc=rss

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Japan Likely to Announce Plan to Join Free Trade Pact

November 11, 2012 by Leave a Comment

Major newspapers said on Saturday that support was building in the Noda administration to announce Japan’s entry into the proposed American-led regional agreement sometime in the next two months. The reports said that move would be immediately followed by a decision to dissolve Parliament for national elections that would take place a month later.

Japan has long wavered on entry into the pact, the Trans-Pacific Partnership, which is opposed by the nation’s heavily protected farmers but supported by consumers and industry groups. Because the reports about the government’s intentions appeared in most major newspapers, it suggested Mr. Noda’s Democratic Party had made a concerted effort to begin signaling a change in strategy.

The state minister for national policy, Seiji Maehara, has also said joining the agreement would become “a public promise by the Democratic Party that should be a main issue in elections.”

Signing onto the pact is likely to please the United States, which has urged Japan for the last two years to join the group as a way to push the global economy out of its prolonged slump. News reports suggested that the move would also be a way for the government to lash itself even closer to the United States at a time when Japan is increasingly jittery about China’s ambitions in the region. The reports described the likely decision to join the pact as a domestic political gamble by the prime minister to prevent his party from a humiliating loss in elections, which must be held before September.

The Democrats have been searching for a way to regain public support after widespread criticism that they mishandled Japan’s response to the Fukushima nuclear accident. Mr. Noda’s approval ratings have dropped into the teens in recent polls.

When pressed by the opposition on his earlier promises to hold elections “soon,” Mr. Noda has said only that he and other party leaders would decide the timing when they were ready.

If he takes a clear stand on the trade pact, Mr. Noda may be aiming to regain support among the Democrats’ base of urban white-collar voters and union members. They are expected to welcome the lower prices and increased exports that more open markets are likely to bring.

But such a move would also alienate farmers, one of Japan’s most powerful bloc of voters. On Friday, about a half-dozen Democrats said they might defect from the party if Mr. Noda were to back the trade deal.

Joining the pact would also put the largest opposition party, the Liberal Democrats, who currently lead in polls, in an uncomfortable political position. The Liberal Democrats have avoided taking a clear stand on the agreement because they have tried to keep the support of farmers and big business, traditionally the party’s two biggest supporters. Mr. Noda may be hoping to hurt the opposition by forcing it to pick one side, news reports said.

Article source: http://www.nytimes.com/2012/11/11/world/asia/japans-premier-may-announce-plan-to-join-free-trade-pact.html?partner=rss&emc=rss

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Germany Holds Talks on National Energy Strategy

November 3, 2012 by Leave a Comment

Until now, each state has drawn up and worked from its own plan for the expansion of renewable resources in its territory, often in conflict with one another. On the federal side, there is no single leader for the project to increase reliance on renewable energy to at least 35 percent by 2020. Instead, responsibilities are divided between the ministries of the environment and the economy, with the education minister responsible for financing research on renewable energy and storage technology.

The opposition Social Democratic Party has pounced on the weakness in the Merkel government’s signature project ahead of national elections next year, while widespread public support for the plan faces strains from a nearly 50 percent jump in a consumer tax for the transformation next year.

“Germany’s energy transformation is threatened with collapse due to the inability of the government” to draw up a master plan, Hubertus Heil, a leading Social Democrat, said before Friday’s meeting.

Germans’ relationship to nuclear energy is deeply emotional, rooted in the antinuclear protest culture of the 1970s and memories of radioactive mushrooms and wild game in Bavarian forests that resulted from the 1986 meltdown in Chernobyl.

It would be a severe blow to Ms. Merkel and her Christian Democrats if the project, passed last year by her center-right government in the wake of the Fukushima nuclear disaster in Japan, were to fail. On Friday, she pledged to work with the states through a national dialogue on how best to move forward.

“Germans can be assured that we feel committed to the goal of energy transformation,” Ms. Merkel said after the meeting. “I felt a spirit that we all want, and perhaps can, achieve this.”

Torsten Albig, a Social Democrat who is governor of Schleswig-Holstein, also praised the discussions as “a considerable step forward” toward reaching a master plan by March.

His northern coastal state, along with Lower Saxony, has been criticized for expanding offshore wind energy at such a rapid pace that turbines have had to be switched off on exceptionally windy days, because they produce more energy than the grid can handle.

Ultimately, Ms. Merkel would like to see the energy generated by wind farms in the north transmitted to the power-hungry industrial south. A plan to expand Germany’s grid with that aim, which would require about 500 miles of new power lines and other major upgrades, is to go before Parliament next month.

Article source: http://www.nytimes.com/2012/11/03/world/europe/germany-holds-talks-on-national-energy-strategy.html?partner=rss&emc=rss

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Britain Takes New Tack in Piracy Fight

August 3, 2011 by Leave a Comment

PARIS — Britain plans to legalize something that many of its citizens have been doing already, perhaps unaware that they were breaking the law: copying music or movies from compact discs or DVDs onto other storage devices, like iPods.

The government said Wednesday that it planned to legalize so-called format-shifting as part of a broad overhaul of the country’s copyright laws aimed at bringing them up to speed with digital technology and the fight against piracy. Across much of the rest of Europe, format-shifting has long been permitted.

“We can’t carry on saying that businesses should embrace technology but then not allow consumers to use everyday technology to play works they’ve paid for,” said Vince Cable, the business secretary.

Last year, Britain’s previous government, controlled by the Labour Party, pushed through anti-piracy legislation only days before national elections. In the voting, Labour lost power to the Conservatives, who now govern in a coalition with the Liberal Democrats, of which Mr. Cable is a member.

In its proposal Wednesday, the government stuck with some of the previously approved plans, but backed away from one main provision: a proposal to introduce a streamlined procedure for blocking access to Web sites that host copyright-infringing music, movies or other material.

A report by Ofcom, the British media regulator, had concluded that site blocking would raise too many complications. Similar proposals have also languished in the U.S. Congress.

While holders of copyrights have been pushing for such measures, saying they could stop piracy at the source, opponents say they are a potential threat to free speech. Rights owners did receive a boost last week when the High Court in London ruled that BT, an Internet service provider, must cut off links to a site called Newzbin2, saying BT was aware that it was being used to pirate movies and other copyrighted material.

While copyright owners have welcomed the court ruling, they say it is expensive and time-consuming to pursue legal action; in the meantime, pirate sites can easily move around to evade enforcement, and new ones are always springing up.

The government did not rule out the possibility of reintroducing legislation to create a fast-track site-blocking system. Geoff Taylor, chief executive of a British music industry lobby group, BPI, urged officials to move quickly.

“A failure to do so will see some of this country’s world-leading industries irreparably damaged on this government’s watch,” he said in a statement.

Mr. Cable said the government would press ahead with plans to crack down on individual file-sharers by implementing a system under which hard-core offenders could face the suspension of their Internet access, if they ignored repeated warnings. A similar enforcement mechanism was recently introduced in France.

In a new wrinkle, the government said accused violators of the anti-piracy laws would be charged £20, or about $33, if they wanted to appeal. The fee, intended to discourage frivolous claims that could overwhelm the authorities, would be refunded if the person were cleared.

While taking action against file-sharing, the government is offering a quid pro quo by moving to liberalize the rules on personal copying. Surveys have shown that most Britons were either unaware that format shifting was illegal or that they flouted the prohibition anyway.

“If you just tell people, ‘you can’t copy this CD that you bought, for personal use,’ they’re never going to respect you when you tell them it’s wrong to copy for others,” said Simon Levine, an intellectual property lawyer at the firm of DLA Piper in London.

In the United States, copying for personal use has generally been permitted under “fair use” provisions of copyright law.

Across much of Continental Europe, private copying of music is legal, with governments levying taxes on the sale of blank CDs or other storage devices, using the proceeds to compensate content creators. No such levy was proposed in Britain — to the annoyance of the Musicians’ Union.

“We are not opposed to the introduction of an exception for format shifting, as long as a system of fair compensation for rights holders is brought in alongside it,” John F. Smith, general secretary of the union, said in a statement.

Article source: http://feeds.nytimes.com/click.phdo?i=8403bfb7258953957b3808b1ea5eb317

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