Brief background in Italian Politics
In November 2011, the technocrat Mario Monti came into office as Prime Minister when the scandal-laden Silvio Berlusconi finally stepped down. Monti did a good job in restoring Italy’s credibility to financial markets, however, he failed to rally enough political support to keep him in his post.
His tenure ended in December of last year, when Berlusconi’s party withdrew its support and consequently, forced Monti to resign.
General elections were held last February in an effort for Italy to form a new government. However, the outcome became inconclusive and the country has been left without any leader… That is, until now.
Last week, Italian President Giorgio Napolitano extended his term as Italy’s president. Usually, the president’s role is mostly ceremonial. But in times of crises, such as the one which the country is in, he has the power to nominate a Prime Minister. Among a handful of contenders, he picked the leader of the Democratic Party, Enrico Letta.
Getting to Know Italy’s New Prime Minister
At only 46 years of age, Enrico Letta is about to become the youngest prime minister in the country since 1987. His political experience includes being the leader of the Democratic Party and serving in secretarial and ministerial roles for research and non-government organizations.
It turns out he’s used to being one of the youngest in the bunch as he became Cabinet Minister in 1998 at a young age of 32, the youngest ever in Italian post-war politics.
How can he affect the euro?
There’s also no denying that Letta shares close ties with former Prime Minister Berlusconi. Letta’s uncle, Gianni Letta, has acted as a behind-the-scenes negotiator for the infamous bad boy of the Italian politics.
Some think that it is good that he is close to Berlusconi as it would be easier to rally their parties on important decisions. We already saw this when Bersani resigned as leader of the Democratic Party, Letta took over and voted with Berlusconi, the leader of the People of Liberty, in order to keep Napolitano in office as Italy’s two biggest political blocs tried to form a coalition.
Of course, there are members of Letta’s party that aren’t too happy about his ties with Berlusconi. Unless he’s able to gain their support, he could be in for a tough ride in terms of securing enough backing for his leadership.
In addition, some are skeptical that Letta will taint the credibility that Mario Monti established for Italy. After all, Monti has set the bar high and has received strong praises for his strict implementation of budget reforms. Letta has already expressed his intention to steer Italy away from heavy austerity and focus more on boosting employment and business activity.
For now though, markets don’t seem too concerned about the potential impact of Letta’s leadership on the Italian debt situation or the overall economy. Finally being able to find a new leader for the country is already good news for the euro, as Italy was able to end two months of political stalemate. Heck, a finally finding a Prime Minister is better than no Prime Minister, right?