Greek Prime Minister Lucas Papademos and Italy’s Mario Monti were appointed within days of each other last November to replace politicians who took their countries to the brink of financial collapse.
Both sober former economics professors who have helped cement «technocrat» into the lexicon of Europe’s debt crisis, they were rushed in to head emergency governments as fears grew that the entire euro project was heading for a train wreck.
Since then, their paths have diverged dramatically.
Monti, a powerful European Commissioner for 10 years from 1995, is the toast of Europe. His tough reforms to Italy’s stalled economy have been accepted with little serious public or political resistance and markets have reacted positively.
Helped by cheap funds from the European Central Bank, borrowing costs have come down steadily. Yields on Italy’s 10-year bonds are now around 5.5 percent, compared with almost 8 percent at the height of the crisis late last year.
That is still high but no longer at the levels which pitched Greece into seeking an international bailout in 2010. The pressure on Rome has palpably diminished.
By contrast Papademos, a former vice president of the European Central Bank, is facing resistance to reforms from the three parties that make up his emergency coalition government and open impatience from foreign creditors, especially European paymaster Germany, which despairs at Greece’s chaotic response to the crisis.
The Athens government has passed brutal cuts to public spending and steep tax hikes but even with a gun to its head, it seems powerless to reform the inefficient public administration or overcome resistance from unions and lobby groups to open up its markets to more competition.
“It’s all very well crying for the poor Greeks but they have hardly undertaken a single one of the key reforms,» said one senior international official, who is closely involved in negotiations with Athens on a new bailout.
Papademos has had a difficult hand to play since taking over from Socialist George Papandreou, with a shattered economy now in its fifth year of recession, an angry and disillusioned public and a political class apparently more interested in jockeying for power than fixing the crisis.
On January 25, MPs from across the political spectrum, who support Papademos’ government, rejected one of the government’s reforms, in a sign of rebellion against tough measures prescribed by international lenders.
The vote was only a procedural glitch on pharmacy opening hours, but the MPs’ action caused exasperation abroad, where it was interpreted as a sign of lack of commitment to the reforms.
“We have the wrong mentality,» said 18-year-old student Giorgos Karioudis, one of an army of young people facing a bleak future in a country where nearly one in two people under 24 is without a job.
“We only think about ourselves and don’t care about the progress of our country. Italians are different,» he said.
That view would surprise many in Italy, where tax evasion and corruption are widespread, politicians are widely despised and many worry about a lack of national cohesion in a country that was unified in 1861.
But Italy has a tradition of swinging behind emergency measures at the 11th hour and similar technocrat governments were brought in to overcome a deep crisis in the 1990s.
Even so, Monti’s appointment three months ago to succeed the scandal-plagued Silvio Berlusconi has produced a remarkable change in the tone of public life.
Not long ago, newspapers were dominated by lurid stories of Berlusconi’s «bunga bunga» sex parties; these days they are full of fact-filled breakdowns of deregulation measures and the assessment criteria for taxing principal residences.
At impressive speed, Monti has pushed through a radical transformation of the pension system, raised taxes, cut spending on public administration and taken on vocal lobbies including lawyers, taxi drivers and pharmacists.
Despite complaints from the targets of his reforming zeal, he has been rewarded with approval ratings of around 60 percent, praise from world leaders and a French prize as «European of the Year.”
“It’s the whole of the Italian people who should receive the prize,» he said, when accepting the award in Paris Tuesday, and the public are indeed said to be way ahead of their politicians in accepting the need for bitter medicine.
After the empty promises of the Berlusconi era, Italians are hungry for serious answers to their mounting economic problems and the alarming state of their public finances, said Enrico Letta, deputy head of the centre-left Democratic Party, a member of the broad coalition backing Monti.
“It’s partly the reaction to the situation we were in last year and for the past three years,» he told Reuters.
“This is a serious government which explains policies rather than just making triumphant announcements that never turn into anything, as Berlusconi did. People feel it tells the truth.”
Italy has seen nothing like the repeated protests that made Syntagma Square in Athens a symbol of the euro zone crisis, but it is also true that the sacrifices Italians have had to make are nowhere near as great as those needed in Greece.
Both countries face deep recession but Italy, a 1.5 trillion euro (1.25 trillion pounds) economy with the world’s third largest government bond market and Europe’s second biggest manufacturing base, is far stronger than Greece, a country of just 11 million people which depends on tourism and shipping.
The Greek economy, which grew at breakneck pace from the launch of the euro — seeing its gross domestic product swell from 138 billion euros in 2000 to 235 billion in 2009 — has gone into sickening reverse and faces years of profound and uncertain re-adjustment.
As it plunges deeper into recession, with wages and pensions cut and jobs lost, its economic suffering becomes more obvious – closed shops with «For Rent» signs seem to multiply at the same rate as the number of beggars in central Athens.
Those shopkeepers who have managed to hang on bemoan a sharp drop in spending by consumers, the main drivers of a booming economy just a few years ago. Unemployment, at over 18 percent in October, is rising.
Across the Ionian Sea, Italy’s deep-seated problems remain, including a public debt burden second only to that of Greece in the euro zone, an aging population, chronic youth unemployment and a deep split between the prosperous north and the poor, underdeveloped and crime-ridden south.
An unelected technocrat, due to leave office next year, can hardly hope to reverse all that, but after the theatrical turmoil of the Berlusconi years, Monti has at least managed to change perceptions at home and abroad.