Italy's president attacks Berlusconi over delays

Reuters News
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Posted: Oct 19, 2011 9:21 AM
Italy's president attacks Berlusconi over delays

By Barry Moody

ROME (Reuters) - President Giorgio Napolitano expressed "anguish" on Wednesday about the lack of effective government action to combat Italy's painfully slow growth, joining a chorus of criticism of delays by the government of Prime Minister Silvio Berlusconi.

Despite pressure from Italian business and the European Central Bank, Berlusconi has repeatedly delayed announcing measures to stimulate growth in an economy that has been stagnant for more than a decade.

The delays, caused by squabbling within the center-right government over which measures should be adopted, have put the euro zone's third largest economy in the cross hairs of markets and pushed up yields on Italian bonds.

"This is a moment which requires a strong, clear assumption of responsibility, widely shared, so that it is more credible and effective," Napolitano said at a public ceremony.

"I cannot keep quiet about my anguish at seeing that the political conditions for this wide consensus have not yet occurred," he added.

The president, who is widely respected in Italy, has frequently bluntly criticized Berlusconi's government and expressed increasing frustration at the lack of action.

Despite his largely ceremonial role, in recent months he has at times intervened directly to prod politicians into action.

On Tuesday, Italian banks and business associations criticized the government for delaying reforms and said confidence and faith in Italy was declining every day.

Government disputes over who should replace Mario Draghi as governor of the Bank of Italy have also gone on for months.

Draghi is leaving to become head of the European Central Bank. Berlusconi said on Wednesday he would nominate a new governor on Thursday.

Berlusconi added to the atmosphere of procrastination on Tuesday night when he told reporters after a cabinet meeting to discuss growth stimulating reforms that there were problems both with the Bank of Italy nomination and with raising the funds to finance economic development projects.

"There is no money. We are trying to invent something," he told reporters after the cabinet discussed a decree law to stimulate growth, which has been postponed several times.

"The text (of the law) will be issued when it is convincing. I am not in a particular hurry. I am counting on issuing the decree when a measure is ready that will stimulate development and growth," Berlusconi said.

Under pressure from the ECB, which is reported to have practically dictated the measures to Italy, the government passed a 60 billion euro ($82 billion) austerity plan last month to balance the state budget by 2013.

It increases taxes and the cost of health care but critics say these measures will worsen slow growth in Italy, which has helped push youth unemployment to 28 percent, one of the highest rates in the euro zone.

Discontent over the austerity package and economic decline fueled the biggest demonstration in a global "Day of Dage" against the financial system on Saturday in Rome, which saw the city's worst riots for years.

(Additional reporting by Francesca Piscioneri; Editing by Louise Ireland)