The news today continues the rumoring that Italian banks and bonds are going to see problems this year or early next year. This follows an interesting email exchange (dated the 8th) that I had with a BoomBustBlog contributor (his comments listed below) concerning our European bank and sovereign research from last year.
Three months after NATO first bombed government targets in Libya on March 21, one of the top three powers driving the coalition’s anti-Qaddafi campaign, has had enough. Italian Foreign Minister Franco Frattini called for an immediate halt in hostilities in Libya “to allow humanitarian aid to reach civilians in the country.”
Following his announcement to the lower house of parliament in Rome, the government won a confidence vote over a package of tax cuts and an end to Italy’s involvement in the NATO-led military campaign in Libya.
DEBKAfile‘s military sources report that since 90 per cent of NATO’s air strikes and operations for enforcing a no-fly zone come from bases and command centers in Italy, Rome’s pullout badly jolts the entire war effort against the Libyan ruler Muammar Qaddafi.
France may decide to carry on its air strikes from the French aircraft carrier the Charles de Gaulle and Britain from its air bases in Cyprus. But the operation will be seriously hampered and its prospects of victory against the Qaddafi regime undermined. The only chance of success would depend on US President Barack Obama overruling the Italian decision and restoring the United States to full participation in the coalition’s military assault by operations similar to its Tomahawk missile and air bombardment in the first two weeks of the campaign.
However, the White House, already facing overwhelming congressional opposition to any US military involvement in the Libya, would never get its expansion past this wall of resistance.
DEBKAfile’s special sources report that Italian Prime Minister Silvio Berlusconi‘s decision to quit the war on Qaddafi was the culmination of three developments:
1. He chose June 22 as the date to drop his bombshell and beat by only a few hours President Obama’s forthcoming announcement of the first drawdown of US troops from the NATO-led war in Afghanistan. Berlusconi calculated that the start of America’s withdrawal from one NATO-led war would work just as well for Italy to end its military involvement in another.
2. The Italian prime minister picked up the candid assessments of British and French commanders who warned their government heads that the campaign against Qaddafi could not be sustained past the end of summer. He decided to jump the gun on the two allies.
DEBKAfile was one of the few publications which consistently reported from the third week of March, 2010, that NATO could not win the Libya war. Our sources offered unvarnished facts to counter the string of improbable claims by NATO leaders that Col. Qaddafi’s days were numbered, his army degraded and the rebels strongly pushing for Tripoli.
http://www.debka.com/article/20786/March 20: First coalition cracks as Q digs in for guerilla war
http://www.debka.com/article/20790/March 24: No fly zone runs down.
The Italian prime minister also took advantage of NATO’s bad press after the coalition acknowledging the accidental killing of 9 civilians in a Tripoli bombing Sunday and a second misfiring Monday which killed 15 people including three children.
3. The economic crisis besetting Europe. Berlusconi viewed as unhealthy the combination of the euro zone’s decline and the receding prospects of a coalition victory in Libya. The only way to save the country from being sucked into deep economic distress, he calculated, was to pull out of the war on Qaddafi and restore Rome’s pre-war economic ties with his regime.
Italy must now help repair Libya’s damaged oil industry, the source of a third of its energy needs before the war and get its fuel exports back on track.
The Berlusconi government survived a no-confidence vote Wednesday, June 22, only by the offer of a package of tax cuts and Italy’s withdrawal from the Libya war. After giving up on the Benghazi-based rebels’ competence to get their act together and set up viable institutions of government – at least in the areas under their control – the Italian prime minister decided that mending his fences with Muammar Qaddafi was the better option.
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