Italy pushes through austerity law, Greek PM sworn in

Fri Nov 11, 2011 6:33pm EST
 
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By Barry Moody and George Georgiopoulos

ROME/ATHENS (Reuters) - Italy's parliament on Friday began rushing through austerity measures demanded by the European Union to avert a euro zone meltdown and Washington ratcheted up pressure for more dramatic action from the currency bloc.

The Italian Senate approved a new budget law, clearing the way for approval of the package in the lower house on Saturday and the formation of an emergency government to replace that of Prime Minister Silvio Berlusconi.

In Athens, former European Central Bank policymaker Lucas Papademos was sworn in as Greek prime minister after days of political wrangling, tasked with meeting the terms of a bailout plan to avert bankruptcy.

After President Barack Obama spoke with German Chancellor Angela Merkel and France's Nicolas Sarkozy late on Thursday and called Italian President Giorgio Napolitano, U.S. 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.

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

If the votes pass smoothly, Napolitano will accept Berlusconi's resignation over the weekend and ask veteran former European commissioner Mario Monti, a technocrat like Papademos, to form a government.

Berlusconi has promised to resign after the financial stability law is passed by both houses of parliament. He is no longer insisting on early elections and markets were calmed by the prospect of an interim government, rather than a three-month vacuum before a elections are held.   Continued...