* Monti names technocrat cabinet
* Takes economy portfolio himself
* Government to face confidence votes this week
* Relief across Europe but no impact on yields
By James Mackenzie and Barry Moody
ROME, Nov 16 Mario Monti formed a new
technocrat government in Italy on Wednesday to tackle a major
debt crisis threatening the entire euro zone and said he hoped
it would placate financial markets.
President Giorgio Napolitano swore in a 16-member
government, including three women, at his palace on Wednesday
afternoon, ending a chaotic political crisis that has placed
Italy at the centre of the euro zone's burgeoning problems.
The government now has the urgent task of tackling a broader
crisis that has pushed Italy's borrowing costs to untenable
levels and brought it to the brink of economic disaster.
Speaking after presenting his cabinet to the president
earlier, Monti said: "We feel sure of what we have done and we
have received many signals of encouragement from our European
partners and the international world.
"All this will, I trust, translate into a calming of that
part of the market difficulty which concerns our country."
The appointment of the widely respected former European
Commissioner to replace flamboyant media magnate Silvio
Berlusconi has brought relief in euro zone capitals.
Germany Chancellor Angela Merkel values Monti very highly,
her spokesman said in Berlin, adding that she was ready to meet
him. Many world leaders in contrast tried to keep clear of
Berlusconi, notorious for off-colour humour and diplomatic
Monti, a respected economics professor and former European
commissioner, said he would take the crucial economy portfolio
Corrado Passera, chief executive of Italy's biggest retail
bank Intesa Sanpaolo, was given the infrastructure and
After disputes among political parties which complicated
Monti's task, the new government contained no politicians, as he
was reported in the media to have wanted. Some analysts say this
could make it more vulnerable to ambushes in parliament as it
pushes through unpopular measures.
But Monti said it would strengthen the government by
enabling it to avoid political disputes and press ahead with
"The absence of political personalities in the government
will help rather than hinder a solid base of support for the
government in parliament and in the political parties because it
will remove one ground for disagreement."
He said he would present an austerity programme to the upper
house, the Senate, on Thursday. This is expected to be followed
by a confidence vote in both houses of parliament.
The reforms were demanded by European leaders to stem a
crisis at the centre of the euro zone's problems.
Commentators generally welcomed the ministerial line-up and
Monti's decision to take the economy portfolio. "He obviously
wants to be in control of what is clearly the most critical
area," said Riccardo Barbieri, chief European economist at
Monti said the government's success depended on explaining
what are expected to be tough austerity measures to the public.
The new government was formed in less than three days in a
scramble to face the crisis after market confidence in Italy
It is expected to have an overwhelming majority in both
houses, based on wide external support promised by most of the
political parties except the devolutionist Northern League, a
partner in Berlusconi's outgoing government.
The process is being closely watched by markets still
nervous about Italy's ability to break out of a crisis centred
on its huge public debt and painfully slow growth, despite the
resignation on Saturday of Berlusconi, whose failure to pass
crucial reforms precipitated a collapse of confidence.
Underlining how much is at stake, yields on Italy's 10-year
bonds went above 7 percent again on Wednesday, the level at
which Greece and Ireland were forced into bailouts.
Euro zone defences are not big enough to fund a similar
operation for Italy, the zone's third largest economy, which is
why it is crucial to the outcome of the current debt crisis.
The government announcement had no immediate effect on
Crucial to Monti's success was the backing of the PDL party
of outgoing prime minister Berlusconi, who was forced to step
down on Saturday by the rapidly worsening crisis.
President Napolitano, who has engineered the swift
government transition in response to the collapse of confidence
in Italy, nominated Monti for the premiership on Sunday night.
The president has called for an extraordinary national
effort to win back the confidence of markets, noting that Italy
has to refinance about 200 billion euros ($273 billion) of bonds
by the end of April.
Monti has said his government should last until the next
scheduled elections in 2013, despite widespread expectation that
politicians intend to give him only enough time to implement
reforms before precipitating early polls.
"I hope that this government of technocrats succeeds in
addressing all the requests made by the European Central Bank,"
outgoing Industry Minister Paolo Romani, from Berlusconi's PDL
party, told the Corriere della Sera newspaper.
"But let it be clear that as soon as that is done, we expect
Monti to give the people the chance to choose a government."