Mario Monti replaced Silvio Berlusconi as Italy's new prime minister and named himself economy minister in a new cabinet unveiled on Wednesday, tasked with saving the eurozone heavyweight from bankruptcy.

 

Corrado Passera, chief executive of Italy's biggest retail bank Intesa Sanpaolo, will also head up a reinforced economic development and infastructures ministry charged with boosting the anaemic growth rate. 

Newly-appointed Italian Prime Minister Mario Monti speaks to the press to unveil his cabinet on Nov 16. (AFP Photo/Alberto Pizzoli)

 

Monti will be formally sworn in at 1600 GMT ahead of a handover ceremony with Berlusconi, the flamboyant tycoon who resigned on Saturday to cheering crowds in the streets after ruling for 10 of the past 17 years.

 

A confidence vote in parliament expected as early as Thursday will then launch the new technocratic government, which will have to act fast to reassure the international community that Italy is serious about implementing reforms.

 

As he scrambled to put together his cabinet this week, Monti sought to build consensus around the idea that Italians will have to make "sacrifices" to stave off bankruptcy and has called for "economic, social and civil growth".

 

Monti has won endorsements from all of Italy's main political forces but he faces a major challenge in steering a course through a fractious political world, with particularly intense sniping from Berlusconi's allies.

 

"He Can't Last Long," read a headline in the Berlusconi-owned Il Giornale daily, while some loyalists from Berlusconi's People of Freedom party have called for the colourful billionaire to return to head Italy.

 

A scathing editorial in business daily Il Sole 24 Ore said: "Political forces are divorced from reality, busy negotiating on names (of ministerial appointments) with no concern about weakening the incoming government."

 

The softly-spoken Monti has already won the support of more than half of Italians according to a poll by IPR Marketing, which said 53 percent favour him - though many right-wing voters are still in umbrage over Berlusconi's exit.

 

Tense markets fluctuated ahead of Wednesday's nomination, with the rate on Italian 10-year bonds hovering above the 7.0-percent warning threshold.

 

Stocks also bounced wildly - dropping into the negative shortly before the event after soaring over 2.5 percent in morning trading, in line with rises and falls on other European markets on Wednesday.

 

Despite his 10-year stint in Brussels, the technocrat has never held office in Italy but has already shown mettle by insisting that his government has to stay in power until 2013 - the scheduled date for the next general election.

 

As European commissioner, Monti famously fined US technology giant Microsoft nearly 500 million euros ($672 million at current exchange rates) and blocked a massive $42-billion merger between General Electric and Honeywell.

 

US President Barack Obama said Wednesday he was "deeply concerned" about the turmoil in the eurozone and said the problem in Europe was one of "political will".

 

US Treasury Secretary Timothy Geithner said European countries were making incremental progress in addressing the debt crisis, but added: "We hope they will make progress more quickly."

 

The reserved technocrat Monti, a starkly different figure from his famously larger-than-life predecessor, has said he is "absolutely convinced" Italy can overcome its debt crisis but will have to move quickly.

 

The departing Berlusconi reportedly spent his last day in office packing up gifts - a scimitar from Kazakhstan and a Ming dynasty vase from China, which the clownish premier had famously pretended to drop to the horror of diplomats.

 

After 17 years dominating Italian politics, the colourful Berlusconi has made it clear he had no intention of retiring. Despite recently calling Italy a "shitty country", he swore Saturday to never give up on the land he loves.

 

The European Union already gave its firm approval to Monti even before his formal confirmation, but has warned that Italy may need to impose extra budget cuts on top of two austerity plans approved earlier this year.

 

The EU and the International Monetary Fund this month imposed a humiliating auditing mechanism on the country, the eurozone's third largest economy and an EU founding member, to ensure it is fulfilling its reform promises.

 

Italy's high public debt of 1.9 trillion euros ($2.6 billion) is relatively stable and its deficit relatively low, but the country's lack of growth and recent political weakness have pushed up borrowing costs.

 

- AFP/al