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the Associated Press

Vote on Austerity Plan Sparks Clash in Italy

Frances D'Emilio

An Italian pensioner shouts slogans during a demonstration of trade union Confederazione Generale Italiana del Lavoro (CGIL) at Rome's Paizza del Pantheon on September 14. Italy's lower house of parliament has endorsed the government's 54.2 billion euro ($74 billion) austerity package aimed at calming skittish markets amid a European debt crisis (AFP)

Demonstrator, some armed with smoke bombs, clashed with police in Romenear Parliament on Wednesday night as Italian lawmakers prepared to cast a final vote on a package of new taxes and spending cuts designed to fend off a financial crisis threatening much of Europe.

The lower Chamber of Deputies was holding its final vote on the entire austerity package, following Premier Silvio Berlusconi's success in a confidence vote earlier in the day that helped stifle debate. European Central Bank and European Union leaders in Brussels have pressed Rome for quick passage to calm markets roiled by a crisis that could endanger the entire 17-member eurozone.

But the planned cuts and taxes have angered many Italians, leading to protests similar to those in other European nations tackling similar issues.

Hundreds of protesters marched through Rome's streets, some hurling smoke bombs, while storekeepers hastily shuttered display windows. As police helicopters buzzed overhead, officers in riot gear fanned out through the squares and alleys, herding the protesters away from Parliament and from the downtown palace where Berlusconi resides. At one point an officer struck a protester on his back with a club.

The measures aim to reduce Italy's deficit by more than euro54 billion ($70 billion) over three years through budget cuts, tax hikes and accelerating reform of the country's costly pension system. Italy's deficit-to-GDP ratio now stands at 120 percent, one of Europe's highest.

The government won a key confidence vote earlier in the day 316-302. Berlusconi's conservatives hold a majority in parliament, but losing a confidence vote would oblige it to resign. The Senate approved the package last week.

Italy has come under severe pressure in financial markets because of its high debt levels and poor growth. On Tuesday, the Italian Treasury raised euro3.86 billion ($5.27 billion) from the sale of five-year bonds, but it had to pay an interest rate of 5.6 percent — a euro-era record high for Italy.

The debt problems of Italy, the eurozone's No. 3 economy, deepened fears across Europe over the health of the 17-nation eurozone and its vulnerability.

"The attack of the markets against Italy is a head-on assault on the entire eurozone," said German Vice Chancellor and Economy Minister Philipp Roesler, in Rome for talks with Italian Cabinet ministers.

Roesler praised the Italian government for putting together the austerity package, especially given the political difficulties in pulling it off, and called the accomplishment important "not just for Italy but the entire eurozone."

The German praised Berlusconi's government in particular for committing to achieving a balanced budget by 2013.

Berlusconi had talks with EU officials in Brussels and Strasbourg earlier this week to reassure them of his government's determination to balance the budget. On Wednesday, he met with Wang Gang, the vice chairman of China's main government advisory body, amid speculation that Italy is trying to persuade Beijing to invest heavily in its industries.

Italy's industry minister, Paolo Romani, told reporters that he "can't rule out the purchase of European government bonds by China," the Italian news agency LaPresse reported. "But it will be the Chinese economic system to decide how and when to invest."

Berlusconi has faced criticism for his handling of the crisis, and because of the sex scandals that have plagued the 74-year-old's latest stint in power. Reported policy disputes with Finance Minister Giulio Tremonti and coalition infighting over the package have raised doubts about the government's stability.

Berlusconi has defended his government's handling of the crisis and vowed to serve out his five-year term, which ends in 2013.


Alessandra Rizzo and Victor L. Simpson contributed to this report.

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