Italy's Monti warns parliament ahead of confidence vote
* Monti threat to discredited politicians
* Seeks definitive confidence vote later
* Sweeping and painful reforms
By Paolo Biondi
ROME, Nov 18 (Reuters) - Prime Minister Mario Monti warned Italy's politicians on Friday not to undermine his new technocrat government as he sought a vote of confidence in parliament for a sweeping package of reforms to pensions, taxes and job protection rules.
Monti, appointed on Wednesday to succeed Silvio Berlusconi after the discredited centre-right leader lost his majority in parliament, said he intended to serve until the next scheduled election in 2013.
Seeking the approval of the lower house, which he is sure to get after winning a first vote of confidence in the Senate on Thursday, Monti said his success in passing deep and painful reforms would depend on maintaining the support of parliament.
"I'm not asking for a blind vote of confidence. We're asking for a vigilant vote of confidence," Monti said in a speech to the house.
"But we think that if we do a good job, then you too, when you give us a vote of confidence or withdraw it, should remember what the consequences will be for citizens' confidence in you," he said.
The remark was a clear warning to squabbling politicians who have attracted public outrage for failing to take action as Italy slipped closer to an economic abyss after its borrowing costs soared out of control under Berlusconi.
There are wide suspicions that the politicians, forced to acquiesce in a technocrat government by the power of international markets, would like to topple Monti within months.
The former European Commissioner laid out his policy priorities in a maiden speech to the upper house on Thursday in which he outlined a mix of pension and labour reforms and hinted he would reintroduce a housing tax scrapped by Berlusconi.
Following approval in the Senate, Monti is expected to gain full parliamentary confirmation in the lower house in a vote at around 1500 GMT.
The former European Commissioner has received the backing of all the main parties except the pro-devolution Northern League and is sure to pass the vote.
However Berlusconi's centre-right People of Freedom (PDL) party has made clear that its support is conditional and it has opposed key options in Monti's reform agenda, notably the possible levying of a wealth tax on privately held assets.
PULL THE PLUG
Financial markets, roiled by the escalating euro zone debt crisis, appeared to welcome Monti's speech on Thursday, with yields on 10 year bonds dipping below the 7 percent level widely seen as a symbolically critical red line.
But they remain at untenably high levels of over 6.7 percent and the spread over German Bunds -- the risk premium paid by investors to hold bonds considered less safe than benchmark German paper -- is more than 480 basis points.
Italy, the third largest economy in the euro zone with a decade of anaemic growth and one of the world's highest public debts, has been at the centre of the Europe-wide financial crisis because of fears it would be forced to seek a bailout that would overwhelm the EU's financial defences.
However, with the European Central Bank in the market buying Italian bonds, attention has shifted to other countries including France and Spain, which are also considered vulnerable.
Berlusconi himself has underlined the threat of an early end to the uneasy political truce which followed Monti's appointment, telling supporters the centre-right could "pull the plug" on the government whenever it chose.
"If it were possible to give the idea of our dependence on parliament in some way other than 'pulling the plug', I would be grateful," Monti remarked pointedly in a speech in which he gave lengthy thanks Berlusconi and his chief of staff Gianni Letta for their help during the transition.
Berlusconi had been expected to address parliament but in an entry on his Facebook page said he had decided to leave PDL secretary Angelini Alfano to deliver the party's response.
Monti dismissed complaints that his non-elected administration had been imposed undemocratically by the so-called "grandi poteri" or great powers, the big business and church establishment which had become openly hostile to Berlusconi's scandal-plagued government.
However protests against the "bankers' government" by thousands of students across Italy on Thursday highlighted the problems the non-elected administration will face in pushing through painful austerity measures that will hit millions of Italians.