Italy to vote on cuts, U.S. applies pressure

Fri Nov 11, 2011 5:20am EST
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By Philip Pullella and Michael Winfrey

ROME/ATHENS (Reuters) - Italy's Senate is set to vote on austerity measures demanded by the European Union to avert a euro zone meltdown, after U.S. President Barack Obama ratcheted up pressure for more dramatic action from the currency bloc.

Obama spoke with German Chancellor Angela Merkel and French President Nicolas Sarkozy late on Thursday and also called Italian President Giorgio Napolitano.

A German government official said there was an "exchange of opinions," while Treasury Secretary Timothy Geithner demanded fast action from Europe.

"The crisis in Europe remains the central challenge to global growth. It is crucial that Europe move quickly to put in place a strong plan to restore financial stability," Geithner said in a statement following a meeting with finance ministers from the Asia Pacific Economic Cooperation countries.

After months of dither and delay, Rome appears to have got the message after bond markets pushed it to the brink of a bailout the euro zone cannot afford to give.

The Italian upper house is due to vote on a package of cuts later in the day. The law should pass easily, as it should in the lower house on Saturday.

Voting for the first time in the Senate will be Mario Monti, the former European Commissioner who has emerged as favorite to replace Silvio Berlusconi as prime minister. Fellow technocrat and former European Central Bank policymaker Lucas Papademos will head a new unity government in Greece.

Berlusconi, who lost his majority in a vote on Tuesday, has promised to resign after the financial stability law is passed by both houses of parliament.   Continued...

<p>A worker carries material downtown in Rome November 10, 2011. REUTERS/Stefano Rellandini</p>