Economist Monti takes on mission to rescue Italy

Italy's new Prime Minister Mario Monti (R) shakes hands with outgoing leader Silvio Berlusconi Mario Monti replaced Silvio Berlusconi as Italy's prime minister on Wednesday and appointed himself finance minister at the head of a technocratic cabinet to rescue the eurozone heavyweight from bankruptcy.
The former European commissioner said his new team would "race" to implement "coordinated initiatives for economic growth and development", as he took over from the larger-than-life billionaire media mogul Berlusconi.
Monti, who was formally sworn in by President Giorgio Napolitano, said he would outline his economic programme on Thursday, with intense pressure from financial markets and international leaders to implement reforms quickly.
French President Nicolas Sarkozy immediately congratulated Monti.
"The weeks to come will be decisive. Together we will succeed," he said.
"I am convinced that Italy's adoption of new measures in addition to plans already put in place will permit it, with confidence, to rediscover the way to stability and growth," he added.
Eurogroup chief Jean-Claude Juncker said the appointment was "good news for Italy and for the eurozone." He urged Monti to "put the country back on the road of political, financial and economic credibility."
Tarcisio Bertone -- secretary of state for the Vatican, which had been increasingly critical of Berlusconi -- said the cabinet was "a good team".
At a ceremony to mark the transition of power, Berlusconi, flashing his trade-mark smile, handed Monti a bell rung at the start of cabinet meetings.
Berlusconi, who has vowed a comeback, stepped down on Saturday following intense market pressure, and his resignation was met by cries of "Buffoon!" and "Mafioso!" as overjoyed Italians partied and danced in the streets of Rome.
In Monti's new cabinet, Corrado Passera, chief executive of Italy's biggest retail bank Intesa Sanpaolo, will head up a reinforced economic development, transport and infrastructures ministry charged with boosting growth.
"I am confident the markets can be convinced with clear action. Italy is worth more than the markets think," Passera told reporters.
Another key appointment was Social Affairs Minister Elsa Fornero, an expert in pension reform expected to take charge of that highly sensitive issue.
"These are very competent people," said Gianluca Spina, director of the MIP business school in Milan, adding however: "The issue is not whether these people are good but whether they will have the support from parliament."
The new government will go to a confidence vote in parliament on Thursday which Monti is expected to win handsomely but the political risks could come when he moves to implement painful and long-delayed reforms, experts said.
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".
He 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.
The soft-spoken Monti has meanwhile garnered 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 upset over Berlusconi's exit.
Tense markets fluctuated before and after Wednesday's nomination, with the rate on Italian 10-year government bonds hovering around the 7.0-percent warning threshold that has set off alarm bells around Europe and beyond.
Stock market investors were upbeat however and Milan closed up 0.80 percent.
Italy has to issue 440 billion euros in debt next year, said the main public debt representative in the Italian Treasury, Maria Cannata. She admitted that this would now be "more complicated" because of market volatility.
Italy has a debt mountain of 1.9 trillion euros ($2.6 billion).
Despite his 10-year stint in Brussels, Monti 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.
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 jocular premier had famously pretended to drop to the horror of diplomats.
Also on Wednesday, Berlusconi's singer friend Mariano Apicella released an album of love songs written by the departing premier.
"Stay, and leave me your heart," says one poignant lyric. Another says: "I adore you and I already miss you."