BY GAVIN JONES Reuters The results of last weekend's local elections in Italy are likely to weaken Prime Minister Mario Monti and make it harder for him to push through unpopular reforms to shield the country from a worsening euro zone debt crisis. The vote to elect mayors in more than 900 towns and cities saw heavy losses for the center-right PDL, the largest party backing Monti's technocrat government, and a surge in support for a protest movement that wants Italy to leave the euro. Monti's survival is not at risk, but the two main parties in his majority will impose ever tighter limits on his ability to push through reforms before the next election due in Spring 2013. Former Prime Minister Silvio Berlusconi was quoted in Italian media as saying his PDL would no longer “lie down” before Monti after the party suffered a rout at the polls on Sunday and Monday, losing control of dozens of cities. The center-left PD, which also lost votes but is likely to boost its number of mayors in run-off ballots thanks to the implosion of the PDL, said Monti must now take more account of its positions, which are increasingly hostile to austerity. Monti said on Tuesday that he did not believe the vote would affect his government, but many analysts disagree. “The impression is that Monti is more isolated. Having been the shield of the parties, he now risks becoming their target,” said political commentator Massimo Franco in the daily Corriere della Sera. The only winner at the vote was the 5 Star Movement led by Beppe Grillo, a shaggy-haired comedian who wants Italy to quit the euro and default on its debt and whose caustic invective against the established parties has gained increasing resonance in the wake of a spate of corruption scandals. “The real risk is that the government stays there but can't do much because the support of the parties becomes weaker and more conditional,” Tito Boeri, economics professor at Milan's Bocconi University where Monti used to be rector, told Reuters. “That was a trend in place before these elections, as we saw with the labor reform which is still blocked in the Senate, and now it is an even stronger one.” The labor reform was presented by Monti in March and European Economic and Monetary Affairs Commissioner Olli Rehn warned on Tuesday that further delay in approving it in parliament would damage Italy's credibility. Monti, who came to power last November with a mandate to save Italy from a Greek-style debt crisis, rode a wave of early popularity to push through painful tax hikes and pension reform with virtually no political opposition. However, as market pressure on Italy eased so has the reform momentum, with parties and pressure groups forcing Monti to compromise on proposals to deregulate the service sector and ease firing restrictions. His popularity has fallen sharply and the gap between Italy's benchmark borrowing costs and safer German bunds, which fell to 2.8 percentage points in March, had climbed back to a dangerously high 4.3 points on Wednesday. The common view a few months ago that Monti would transform Italy's political landscape and maintain office at the next election at the head of a new, reform-minded centrist formation is far less popular now. “At the next election I think the Italians will divide between left and right as usual and forget about Monti,” Luca Ricolfi, a sociology professor and prominent political commentator, told Reuters. He said Monti was no longer seen as an electoral asset and his approval rating of around 50 percent was boosted by about 20 points simply because he was not a politician, a status he would lose as soon as he ran in an election. Ricolfi forecast that in his remaining months in office the former European competition commissioner “will do very little at home but be very active in Europe, which is much more popular among the parties”. In his most recent public comments Monti has already been focusing increasingly on the need for a growth agenda for Europe rather than more reforms in Italy. On Tuesday he called for common euro zone bonds and less rigid EU rules on how to calculate budget deficits, and said he “exhorted” Rehn and the Commission to take a more active role in helping the euro zone's stagnant economy. __
