Italian prime minister survives confidence vote
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Kai Ryssdal: Another weekend, another crisis meeting on European debt. Yes, I know it seems like this happens all the time; we all probably know more about the Greeks and their problems than we care to.
But the story today surprisingly isn’t Greece. Just west across the Ionian sea in Italy, Prime Minister Silvio Berlusconi has barely survived a vote of no-confidence. Great news for Mr. Berlusconi. Whether or not it’s good for Italy and the rest of Europe is open to debate.
The BBC’s David Willey is in Rome, welcome to the program.
David Willey: Thank you, I’m glad to talk about Mr. Berlusconi’s victory — or is it a hollow victory? — in parliament today.
Ryssdal: Well you tell me. We all know that the Italians are in some debt trouble. How bad is it and what is this going to mean for them getting out of it?
Willey: The market is going to dictate how this plays out, because the story of Italy’s piling debt is pretty well-known, but just to recap, it has one of the largest debts in the world — of any nation, state. It ran up a debt equivalent to 120 percent of GDP, which is very large, indeed. And attempts by Mr. Berlusconi’s predecessors to pay off this debt haven’t done very well, and he has only just increased it. So there is a basic flaw in the Italian economy, which is that the servicing of this debt is going to be more and more costly.
Ryssdal: We’ve been hearing now, for what seems like years, that the Greeks are the real problem and boy, when Greece goes under, it’s going to be really ugly. How do you make people understand that this is not just another, ‘oh it’s a European economy thing’? Italy is a big, big economy with big, big problems.
Willey: Italy is the third largest economy in the European Union. It’s a great exporter of machine tools, food, many Italian products — high-fashion products, as well, do very well overseas. Italy has quite a vibrant economy; it’s a nation of 60 million people, about the same size as that of the United Kingdom. It’s enjoyed a relative prosperity, I would say, in recent years.
Ryssdal: Is the European bailout fund, the EFSF, equipped to deal with something as big as Italy?
Willey: Well, that is the problem. If the Italian sovereign debt becomes unsustainable, we’re in deep trouble because the debts of various countries are shared. And Italian banks are believed to be fairly exposed to Greek debt, and if the Greeks do default — as now seems very likely — this could set in motion a process whereby Italian banks get into trouble and the confidence of investors in Italian government securities is going to wane. The Italians are going to have to pay more to service this debt and it’s going to become a very uncomfortable spiral of increased prices, which in the end are going to cause ordinary Italians a lot of trouble.
Ryssdal: So when you go out to cafes in the evenings or the markets at lunchtime, what are ordinary Italians saying? We’ve heard lots of about the Greeks, not so much about the Italians.
Willey: The Italians are pretty fed up with Mr. Berlusconi. They say he’s more interested in his own business affairs, and in his various women friends. But the general impression here is Mr. Berlusconi is in the twilight of his period of power, and that we should shortly see his departure. Although he himself insists that he is going to stay on in office as prime minister of Italy until his mandate expires in 2013.
Ryssdal: David Willey is the BBC correspondent in Rome. David, thank you very much.
Willey: Thanks to you.
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