ROME, Dec 5 (Reuters) - If any reminder was needed that the fate of Italy lies outside the country, it was Prime Minister Mario Monti’s decision to hold a highly unusual separate news conference for foreign reporters on Monday to explain his economic programme.
Monti, the respected head of a technocrat “Save Italy” government, impressed investors with a 30-billion euro package of painful and rigorous austerity measures unveiled on Sunday.
Italian bond yields, which had flirted last week with eye-popping rates above 7 percent, dropped back almost a full percentage point on Monday.
But it was difficult to separate the impact of Monti’s measures from a broader mood of optimism that euro zone leaders may finally have summoned enough resolve to provide a concerted plan to restore investor confidence in the euro at a summit at the end of this week.
All along, much of Italy’s fate has remained outside the control of Monti despite the sighs of relief that met his appointment last month after mounting exasperation over the antics of his billionaire predecessor Silvio Berlusconi.
So Monti’s decision to hold a long and detailed news conference on Monday for the foreign press before he presents his measures to parliament was astute.
He knows they play a vital role in the crucial foreign perception of whether Italy can fight the two-headed dragon of huge debt and a decade of almost stationary growth.
In a clear drive to win over the foreign reporters, Monti said he had brought forward his cabinet meeting by a day specifically so he could talk to the foreign media on Monday before going before parliament.
He also emphasised that he was speaking to them before his scheduled appearance on Tuesday night on one of Italy’s most watched television programmes to explain his austerity package to the nation.
Everybody from analysts to European leaders has been saying for months that the euro zone crisis is systemic and cannot be solved individually, however tough vulnerable governments are with their own people.
“Italy and Spain have been experiencing externally driven deteriorations in their perceived creditworthiness which cannot be stemmed by domestic policy reforms alone,” Nicholas Spiro, Managing Director of Spiro Sovereign Strategy, said on Monday.
The massive debt and stagnant growth in Italy which markets focused on in July were nothing new. They had been there for years.
Turning the cross hairs on Italy was largely the result of contagion from Greece and sagging confidence in the euro zone as a whole.
In fact, Italy’s bond yields rose rather than falling after Monti took power, prompting Berlusconi to suggest he was wrongly forced out by a panic over markets that had sent Rome’s borrowing costs to levels at which Greece, Portugal and Ireland were forced into a financial bailout.
A bailout for Italy, the euro zone’s third economy, would overwhelm Europe’s defences.
In Monday’s news conference, Monti said his government intended to set up special structures for dealing with foreign journalists, who have been deeply frustrated for decades by the reluctance of Italian officials to give out information.
Official spokesmen are reluctant to be quoted in anything but the vaguest terms, even when the inquiry is mundane.
Whatever the new prime minister’s motives, his change of style compared with the scandal-plagued and flamboyant Berlusconi was clearly appreciated.
Some members of the foreign press, many of whom felt ignored by Berlusconi and reciprocated with scathing coverage, were so happy to have a prime minister visit their association in Rome that they broke into respectful applause when Monti entered and left the room.