Steering a Path to Recovery

(Rome) – The euro zone debt crisis has shown at an unprecedented level the interplay of European politics and economics. It has become increasingly clear that the future of the euro zone depends heavily on the ability of top leaders to craft a cohesive and unified battle plan.

They will now look to new leadership in Italy. On July 11, Italian premier Mario Monti stepped down as finance minister and appointed junior minister Vittorio Grilli as his replacement. Grilli faces a grim situation. Italy's public debt – recently downgraded by Moody's, the rating agency, from A3 to Baa2 – is equivalent to 123 percent of its GDP. To counter Italy's debt problems, Grilli has announced a planned sale of public assets which he says could reduce the country's public debt by 20 percent in five years. In response to the debt crisis in general, Grilli has committed Italy to putting 14.3 billion euros into the European Stability Mechanism (ESM) by 2014.