ROME ? In Italy's high-stakes gambit for economic survival, new Premier Mario Monti is facing serious resistance from three tenacious forces: global financial markets, Italian politicians and Italian labor unions.
Monti's challengers are showing little restraint, even when facing a possible worst-case scenario of an Italian default on euro1.9 trillion ($2.5 trillion) in sovereign debt, an event that would break up the 17-nation eurozone and cripple the global economy.
Monti, an economist and university chief tapped last month to lead a technocratic government, pledged Thursday to overcome any naysayers by staying his course. That plan aims to reduce public debt, cut government spending, overhaul the pension system and reform the restrictive labor market to boost growth.
"Resistance is not a novelty when you want to deploy the forces of liberalization and competition," Monti said. "This is resistance that often is not won with the first strike, but with tenacity."
Monti has already issued his austerity and growth measures as an emergency decree, but Parliament must approve it. To make sure that happens, his government of technocrats has called for a confidence vote when the measures go to the lower house Friday and then to the Senate, which is to vote by Sunday. A failure would mean his government would have to step down.
Despite widespread opposition to the measures demanded by the European Union and the European Central Bank, they are expected to pass because the alternative is unthinkable.
"I have the impression that Italians, even with little sympathy for sacrifices, are realizing that the alternative is not a life without sacrifice, but a life with even greater sacrifices," Monti said.
Italy's borrowing costs spiked again Thursday in its last bond auction of the year, forcing the debt-ridden nation to pay 6.47 percent for investors to lend it euro3 billion ($3.95 billion) over five years. Italy is expected to seek to borrow over euro300 billion ($390 billion) next year ? an enormous load as rates edge closer to the 7 percent level that forced fellow eurozone nations Greece, Ireland and Portugal into bailouts.
Italy's weakness on the bond market is not all of its own doing. The eurozone's third-largest economy has been left exposed by the failure of last week's EU summit to pledge additional liquidity to protect Italy as well as Spain.
"There is no credible firewall around Italy to allay investor concerns about its colossal funding needs next year," said Nicholas Spiro of Soiron Sovereign Strategy. "Italy's predicament is dire. It has become a proxy for eurozone risk at a time when its funding requirements are about to balloon."
Monti will face even bigger tests in January, when Italy returns to the bond markets to raise money and the government seeks another round of even tougher austerity measures. Any signs his government is buckling to political interests could blunt market confidence in Italy's ability to avoid default.
"With regard to Italy, the immediate question is whether the European authorities have done enough to prevent a liquidity crisis emerging," said Neil Mellor at the Bank of New York Mellon's Global Markets. "(With) the yield on 10-year Italian government paper having shot back above 7 percent after yesterday's auction, the outlook doesn't look good."
Facing even this, political forces in Italy have refused to bite the bullet and accept sacrifice. Instead, they have bickered for changes and won some, sparing pharmacists and taxi drivers from a first round of labor law reforms.
"In a difficult moment like this, families and enterprises are hurt, and there are those even in the most difficult moments who raise objections and bring politicians to their knees," said Emma Marcegaglia, the head of Italy's industrial lobby Confindustria.
In fact, Monti has surprised even some supporters by turning to the traditional sources of revenue ? raising the sales tax and levies on cigarettes, high-powered cars and yachts ? while shying away from confrontation with trade groups blocking rules opening up restricted professions.
"To disappoint public opinion, above all that sector most able to support the sacrifices, risks being a fatal error," said Stefano Folli, respected political analyst in Il Sole 24 Ore, the newspaper of Italy's business lobby.
Confindustria delivered the news on Thursday that Italy is heading toward recession, and projected an economic contraction of 1.6 percent in 2012 ? more than double the 0.5 percent contraction forecast by Monti's technical government. Confindustria previously had forecast growth of 0.2 percent.
Confindustria economists also predicted that unemployment would rise to 9 percent in 2013, with 800,000 more people out of work than in 2008.
"The situation is even worse than we expected," said Corrado Passera, economic development minister. "We are in a recession. If anyone had any doubts about the numbers, we can no longer hide behind 'maybe not.' "
In the lower house Thursday, the speaker suspended the session and ejected two lawmakers from the right-wing Northern League who held up banners against Monti's resurrection of a tax on primary homes. Northern League lawmakers also whistled in protest of the austerity measures.
"Shepherds whistle, not lawmakers," the clearly agitated speaker, Gianfranco Fini, said as he sought to bring order.
On Wednesday, Northern League members protested with signs saying "Enough Taxes" and calling Monti's austerity program "robbery."
Discontent has spilled over into the streets, with hundreds of firefighters demonstrating outside Parliament on Thursday. They contend Monti's measures would put some 20,000 firefighters without long-term contracts out of work in January without any safety net.
"There are colleagues here with five, ten, 15, 20 years of work experience on their shoulders, and Rome does not recognize us with a full-time position," said Luca Basso, a firefighter with temporary job. "The firefighters crew is drifting, practically collapsing, understaffed in a frightening way."
A nationwide transport strike was set to begin Thursday evening and run most of Friday.
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Barry reported from Milan.
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