* Monti faces opposition from some politicians
* Under secretaries choice delayed
* Little impact from Monti on markets
By Barry Moody and Massimiliano Di Giorgio
ROME, Nov 25 A punishing sale of Italian
debt on Friday was not just bad news for the country's finances
and the euro zone as a whole but increased political problems
for the new technocrat government of Mario Monti.
The sale, in which Italy was forced to pay a record 6.5
percent for six month paper, comes on top of early sniping by
politicians who were dragooned into accepting Monti a week ago
only because of Italy's soaring borrowing costs.
Monti's predecessor, flamboyant media magnate Silvio
Berlusconi, was finally forced to resign on Nov. 12 because of
untenable yields on Italian debt which have put the euro zone's
third largest economy at the epicentre of its widening crisis.
But so far, despite warm praise from European leaders who
have greeted Monti with open arms -- in contrast to their barely
concealed disdain for Berlusconi -- Italian debt yields are
still going the wrong way.
The Italian auction capped a terrible week for the euro zone
after a disastrous German bond auction and a continuing failure
of European leaders to agree measures to combat the crisis.
Moreover, Spain has been forced to pay record interest on its
debt despite the landslide election of a conservative
Italy's auction on Friday, described by one analyst as
"awful", spooked investors further and pushed two-year yields on
the secondary market to an eye-watering euro lifetime high of
more than 8 percent.
Longer term debt is above a "red line" of 7 percent which
forced Portugal, Greece and Ireland into bailouts that Europe
could not afford for the much bigger Italian economy.
Many analysts say the euro zone crisis is now systemic, but
Berlusconi, whose sexual and legal scandals combined with his
inability to pass key reforms led to his demise, quickly pointed
out the lack of any substantial premium from Monti's arrival.
"Everyone has been able to see that the (bond) spread has
remained high even after I resigned: evidently our government
was not at fault at all," he said in a newspaper interview.
Umberto Bossi, head of the devolutionist Northern League and
Berlusconi's principal partner in the ousted centre-right
government, has refused to support Monti and was scathing about
the new government.
"It's lousy. It seems an improvised government to me," he
told reporters on Friday. He said Monti was like a "lead climber
who has only seen the mountains in a postcard."
Monti's problem is that although most of Italy's parties
have promised broad support in parliament to face the crisis, he
was unable to persuade them to include ministers in his
government, robbing him of political cover.
This problem has already become apparent in his difficulty
in appointing about 30 deputy ministers and under-secretaries,
apparently because of disagreement among the parties.
His warm welcome in Brussels this week has been interpreted
negatively by some politicians and commentators, who accused him
of giving details of his reforms to German Chancellor Angela
Merkel and French President Nicolas Sarkozy before they were
revealed to the parties or markets.
"On his knees in front of Merkel," said a banner headline in
il Giornale, owned by Berlusconi's brother Paolo.
A commentary by the paper's editor, Alessandro Sallusti,
said Monti "told the Chancellor what he is silent about to his
fellow citizens and, what is worse, to his parliament."
Underlining the deep political tensions in Italy, Monti had
to meet senior party leaders in secret on Thursday night to
discuss the under-secretary problem, apparently because they did
not want to be photographed together.
"When you have been spitting on each other for three and a
half years, how can you suddenly meet publicly to decide who
should be the undersecretaries?" the source said, referring to
bitter political infighting since the last election in 2008.
Political sources told Reuters the summit took place,
despite official denials, and it was widely reported in Italian
newpapers. Appointment of the junior government officials would
be delayed until next week, the sources said.
Parties on both left and right will face opposition from
their supporters in backing unpopular legislation from Monti to
cut Italy's debt and reverse a decade of stagnant growth.
Many political insiders believe the politicians will
sabotage Monti as soon as they can, and that he won't make it to
the next scheduled election in 2013.
"These are not very encouraging developments. Monti has a
honeymoon of about three months in which he can try to push for
some major reforms," said Franco Pavoncello, political science
professor at Rome's John Cabot university.
"I'd be surprised if there is not a general election by June
of next year," he added.