Monti in agony as austerity starts to take human toll

Milan: For the Italian entrepreneur whose business and marriage were falling apart, a tax bill was the last straw. Armed with a shotgun and two revolvers, Luigi Martinelli took 15 hostages at a government tax office last week, demanding only that his story be heard.

Italy has largely been spared the mass protests that have gripped Greece and Spain, but economic agony is starting to bite here as well. A spate of suicides by businessmen has called attention to the crisis. Martinelli's cry of despair struck a deep chord among Italians, many of whom felt sympathy as his lawyer spoke to cameras after the cleaning business owner released his hostages.

Mario Monti, hailed as a saviour in November when he was named premier to tackle Italy's financial crisis, is feeling the sting himself as he comes under attack from all sides — variously described as a cold-hearted economist, a slave to the banks or a softie lacking the courage to push harder with reforms.

"Monti is out of alibis," the business daily il Sole-24 Ore wrote last week. "He needs to do just a few things, but immediately."

Restive population

The resounding anti-austerity votes in elections in France, Greece and Germany's most populous state have piled pressure on Monti, who needs to placate an increasingly restive population while persuading markets that it's safe to lend to a nation whose public debt of nearly ¤2 trillion (Dh9.3 trillion), the highest in Europe, amounts to a staggering 120 per cent of GDP.

Adding to the urgency, Italy announced this week that it sank deeper into recession, its economy shrinking for the third straight quarter in its biggest contraction since 2009.

Bold action is critical, economists say, as Italy is seen along with Spain as a next possible target for a bailout. Economic meltdown in Italy, the EU's fourth largest economy, would endanger the entire European project — with potentially debilitating consequences for the global economy.

Monti, a former EU competition commissioner tapped to head a government of technocrats, is pushing structural reforms, such as liberalising labour laws and busting business monopolies to stimulate growth and boost competitiveness. At the same time, in keeping with Europe's austerity push, he has raised taxes and cut spending.

Signs of frustration

Both prongs of his econ-omic strategy entail pain, and have won him many enemies.

The normally unflappable premier is beginning to show signs of frustration.

"The human consequences of the crisis should lead to reflection by those who brought the economy to this state," he said recently, "and not be blamed on someone trying to find a way out."

Monti's efforts have been bogged down by entrenched lobbies that have been targeted by his reforms and risk being weakened in Parliament by lawmakers worried about how they will be judged in national elections next year. And a key measure to reintroduce a property tax on primary residences abolished by former Premier Silvio Berlusconi is facing fierce popular resistance by homeowners, about 70 per cent of Italians.

Berlusconi, whose erratic leadership was widely blamed for deepening Italy's crisis, is no doubt enjoying watching Monti squirm.