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Italy’s economy minister quits

September 22, 2005

By Phil Stewart

ROME (Reuters) – Italian Economy Minister Domenico
Siniscalco has resigned over government infighting and the
administration’s failure to oust central bank governor Antonio
Fazio over a banking scandal, the Treasury said on Thursday.

“Siniscalco has resigned,” a Treasury spokesman said,
confirming media reports and adding that the reasons for his
decision to quit as outlined in newspapers were correct.

“Honestly, I couldn’t take it anymore,” Siniscalco was
quoted as saying by La Repubblica.

“The problem isn’t Fazio, but (the government) which is
incapable of resolving the problem. For this I’m not
embittered, I’m scandalized.”

Siniscalco has repeatedly called on the Bank of Italy
governor to step down over accusations that he showed bias
against Dutch bank ABN AMRO in a bank takeover battle.

La Repubblica quoted Siniscalco as calling Fazio an
institutional “monster” hiding behind central bank
independence. Fazio has denied any wrongdoing.

Local media said Siniscalco was also angered by deep
divisions within the center-right government over his 2006
budget proposals.

Siniscalco’s resignation is a major blow to Berlusconi,
struggling to hold the argumentative ruling coalition together
before national elections due by May 2006. Opinion polls show
the center-left opposition well in the lead.

The news could also damage Italy’s credibility on financial
markets, with analysts fearing the government might push
through a voter-friendly budget despite weak public finances
and a growing deficit.

Siniscalco is an economics professor and does not belong to
any political party. He took over as economy minister last year
after then incumbent Giulio Tremonti quit following a bout of
vicious coalition infighting.

ANSA news agency said Berlusconi could step in as interim
economy minister.

Other media said the prime minister might ask Tremonti to
return as economy minister, or name Deputy Economy Minister
Giuseppe Vegas to take over Siniscalco’s domestic dossiers with
Tremonti assuming responsibility over international matters.

WASHINGTON VISIT

Aides to Fazio have said the central banker will travel to
Washington this week to attend the annual International
Monetary Fund meeting despite pressure on him to step down.

Siniscalco has accused Fazio of damaging Italy’s
international standing and has urged Berlusconi to be more
forceful in trying to dislodge the central banker.

Berlusconi has held back from demanding Fazio’s head
because his most loyal coalition partner, the Northern League,
has stoutly defended the central banker.

Tensions have regularly flared within the four main
coalition parties since they took office in 2001, and relations
have further degenerated in recent weeks as Italian politicians
prepare for a bruising election campaign.

Coalition members fear a rigorous 2006 budget might scupper
any remaining chances they have of regaining power.

The budget bill has to be approved by the cabinet before
the end of the month.

Siniscalco had circulated draft proposals calling for
deficit cutting measures worth 21.3 billion euros, but the
plans received short shrift from some government allies.

“The budget needs rewriting,” said Ivo Tarolli, a senator
for the Union of Christian Democrats (UDC), a centrist
coalition party that has proved a constant thorn in
Berlusconi’s side.

Tarolli said on Wednesday the package showed no economic
strategy and would not help the center-right win the election.




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