Man tapped to head Italy firmly backs euro, ex-IMF official

The man tapped to head a neutral government in Italy after two populists failed in their bid is a former official at the International Monetary Fund who is a firm disciple in the euro and in the necessity of Italy cutting its stubbornly high-debt load.

Carlo Cottarelli, an economist, has previous government experience under the short-lived center-left government of Enrico Letta, tapped to identify areas where government spending could be trimmed. He received 32 billion euros ($ 37 billion) in cuts, but left embittered when the governmental forces soon changed hands at the obstacles he found within the bureaucracy resisting cuts.

On Monday, President Sergio Mattarella tapped Cottarelli to try to sort a government that can bring Italy to a new election, which Cottarelli told could come as early as this autumn.

In his first statements, Cottarelli sought to calm marketplaces and Italy’s European partners, assuring that his government would guarantee “prudent” management of Italy’s debt, which at 132 percentage of gross national product is Europe’s heaviest after Greece.

While vowing to press Brussels to respond to the concerns of Italians, Cottarelli told any such dialogue must be in “full recognition that as a founding country of the European Union, our role in the union is essential, as is our continued participation in the eurozone.”

Cottarelli received an undergraduate degree in economics and banking from the University of Siena and a master’s degree from the London School of Economics. He worked seven years at the Bank of Italy and then one at oil company Eni, both in research postures, before heading to the IMF, where he worked for 25 years, specializing in monetary policy, capital marketplaces and fiscal affairs.

Since October, he has headed an observatory on Italian public accounts at the Catholic University of Milan, where he has a healthy Twitter feed of 15,000 followers.

He recently wrote a volume, “The Seven Capital Sins of the Italian economy, ” which might be read as a mission statement for a new government. He lists the sins as corruption, tax evasion, bureaucratic mire, the slow pace of justice, the low birth rate, the gap between north and south, and the difficult adoption off the euro.

In his current role, Cottarelli has constructed frequent appearances in Italian media to evaluate the fiscal plans of the populist parties that had hoped to form a government together, the anti-establishment 5-Star Movement and the euroskeptic League. Their attempts to sort a government foundered on insisting on an economics minister with anti-euro opinions, which Italy’s president said set Italians’ savings and investments at risk.

Cottarelli told Italy’s Radio Radicale two weeks ago that the two parties’ primary fault was “making people in some way believe that without the euro, all problems would disappear . … Now they are trying to say that we are genetically incompatible with the euro.”

He rejected that debate telling Italy isn’t structurally weaker than Germany, but that the message needed to be underlined that “if we want to share currency, we need to behave in a different way.” He noted that Italy’s inflation level is currently below Germany’s, making Italy more competitive industrially.

“To abandon the thing at this phase seems to me to be a mistake, ” he said.

He also has emphasized the need to bring down Italy’s enormous debt loading, which costs about 60 billion euros ($ 70 billion) a year to service through interest pays, in order to free Italy from market forces.

Such credentials made him a natural picking for Mattarella. But the prospect of a neutral government erupted a backlash among the two populist parties, who are view it as yet another move by special interest to control Italy against the will of the people.

Make sure to visit: CapGeneration.com

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