Debt crisis rattles eurozone political landscape
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Xinhua, November 21, 2011
Even Berlusconi, dogged by a variety of accusations ranging from briery to paying an underage girl for sex, had managed to stand as Italy's longest-serving prime minister and the dominant figure in Italian politics for almost two decades.
But that was only before the towering debt chipped away their grasp onto power, and the crisis is still far from over.
NEW FACES, SAME CRISIS
The face-changing in the political landscape of these troubled countries could be a step forward in the right direction, analysts said, if coupled with necessary reforms to spur growth.
"The new governments can benefit from the credibility of its leaders which the previous ones couldn't," said Fabien Zuleeg, the chief economist of European Policy Center (EPC).
"But it needs to be clear that they will get the room to implement significant reform, including not only austerity measures but also structural reforms and even investments to enhance future growth," he said.
However, without finding a lasting solution to the bloc's underlying problem of economic divergence, the leadership changes alone would not be enough take the financially troubled states to their long-awaited end game, according to Xiong Hou, a research fellow with the Chinese Academy of Social Sciences (CASS), a top Chinese think tank.
"The current difficulty in the eurozone is a result of long-term financial problems in the region. Changing faces in the government is not a magic cure for that," Xiong said.
The formation of a technocratic government in Italy led by ex-European Central Bank (ECB) vice president Mario Monti, was supposed to sooth political pressure and henceforth eases market stress on the country.
But it did not stop Italy's 10-year bond yield from breaking a dangerous threshold of seven percent again this week. Ireland, Greece and Portugal were all forced to request international aid after their borrowing costs reached similar levels.
Greece raised some 1.3 billion euros in a three-month treasury bills auction on Tuesday, at a slightly higher interest rate compared to the previous sale in October, days after the respected economist Lucas Papademos was sworn in as the new prime minister.
At the same time, Spanish 10-year bond yields also hit 6.98 percent, their highest level since 1997, just three days ahead of the general elections.
Meanwhile, the firewall devised to protect vulnerable euro countries from the crisis is not yet strong enough.
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