Coalitions of the willing face many tough battles ahead

Greece and Italy have bought a little time for Europe in its battle to save the euro by easing out contested leaders and ploughing on with long-overdue economic reforms.

But their new governments of national unity face a mighty task and may well survive only a few months.

Relieved that headway was apparently being made in resolving the debt crisis that has driven the single European currency to the edge, the markets reacted favourably after a technocrat took the helm in Athens and a former European commissioner prepared to follow suit in Rome.

"What we wanted at the IMF was political stability and a clear policy in both countries. I believe significant progress has been made," the head of the International Monetary Fund (IMF), Christine Lagarde, said.

In Greece, the new Prime Minister is Lucas Papademos, a former vice president of the European Central Bank (ECB). His finance minister is Evangelos Venizelos, a holdover from the previous government who has won high marks for tenacious lobbying for belt-tightening. In Italy, Prime Minister Silvio Berlusconi, ousted in a parliamentary revolt, resigned to jeering crowds in Rome after the Lower House of Parliament overwhelmingly approved the reforms he had reluctantly promised to fellow European leaders last month. His likely successor is former European commissioner Mario Monti, a 68-year-old economist.

The new governments are essentially "coalitions of the willing," comprising parties who have at times been bitterly at odds and now find themselves in bed together.

The Greek Government includes members of the Socialist Party, the opposition conservatives and a fast-rising ultra-right party, LAOS.

These unnatural alliances will have a honeymoon for a while. But when the going gets rougher, the coalitions will be exposed to sniping from the powerful men they forced out - and who will claim the credit, saying they prepared the ground, even if the reforms succeed. And as both prime ministers are unelected technocrats, the governments will have poor legitimacy with the electorate. Yet early elections would revive the uncertainty that has so traumatised investors.

"If Monti fails, Berlusconi will attempt to convince voters that he is still the only possible 'saviour'," Andrea Mammone, professor of Modern History at London's Kingston University and co-author of Italy Today: The Sick Man in Europe, told the Herald. "In any case, the political game in Italy is still in progress."

It is one thing to pass an austerity law. But it is quite another to translate the text into practical measures to boost government revenue, cut state payrolls, liberalise the labour market and privatise state assets in countries that are notorious for civil-service bloat, political patronage, closed job sectors and tax dodging.

"Italy's problems will not go away with Berlusconi," said Vincenzo Scarpetta, an analyst at the London-based think-tank Open Europe.

"Berlusconi's personality has a role in this crisis, but it is definitely not the reason for the crisis. This is just the beginning, because now Italy needs to implement these reforms."

Greece's Government is even more hard-pressed. It has until December 15 to convince the EU and IMF of its earnestness in order to unlock a tranche of €8 billion ($14 billion) that will keep the country afloat. Under the scrutiny of these two bailiffs, it will then have to push through reforms in exchange for a second EU bailout of €100 billion in loans, €100 billion in debt reduction and a further €30 billion in guarantees.

In the meantime, public anger in Greece is unabated.

The main public sector has called a three-hour strike tomorrow night, in protest at rising taxes and 30,000 job cuts across the civil service. Demonstrations have also been scheduled for Thursday, coinciding with a meeting of EU finance ministers in Brussels..