Alexei Monsarrat: Italy Must Defy its Fractious History to Save Europe

Alexei Monsarrat is the director of the Global Business and Economics programme at the Atlantic Council.

Italy has a nearly 3,000-year history of violent and costly attempts at cohesion. Now, its people must take unity to a totally new level, coming together over painful reforms that will make or break the world's eighth-largest economy — and the euro currency that holds much of Europe together.

The November 12 resignation of Italian Prime Minister Silvio Berlusconi gives the country the opportunity to defy its history. The designated premier, Mario Monti, is a respected, Yale-educated economist whose support for substantial reforms is an encouraging sign after 17 years of chaotic rule under Berlusconi. But a daunting number of things will need to go right — and quickly — for Professor Monti to save the country.

First, a new Italian government must instill confidence within bond markets that it can actually meet its debt payments. Italy needs over $400 billion (Dh1.46 trillion) in external financing next year alone to cover its projected spending. By comparison, Greece's much smaller economy has a projected budget shortfall of about $20 billion....