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November 16 - 22 2011

News

Eurozone crisis

The Telegraph

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μWorld News PAGES 13-17

μComment PAGES 18-21

μ Letters

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μObituaries PAGES 22-23

μ Features

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μCulture

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μExpat Life PAGES 29-31

μBusiness

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NEWS P12

NEWS P9

Tributes to a legend Thousands turn out for the funeral of DJ Sir Jimmy Saville

M5 disaster investigation Fireworks display organiser faces questions over fatal pile-up

BUSINESS P35

EXPAT P29

My China adventure After four years, it’s goodbye to face masks and censorship

Comet chain sold for just £2 Failing electrical stores taken over in bargain basement deal

LOTTO 9/11

LOTTO 12/11

8 2 10 23 27 32 6 12 13 28 33 38

Bonus Ball 44

Bonus Ball 10

There were two winners of Saturday’s £3.9m jackpot and one winner of Wednesday’s £1.8m prize

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The Telegraph

Nick Squires in Rome and Harriet Alexander in Arcore SILVIO BERLUSCONI resigned as Italy’s longestserving post-war prime minister last Saturday night, bringing to an end a 17-year political career marred by sex scandals, corruption allegations, and gaffes on the international stage.

His departure came hours after the country’s lower house of parliament approved, by a margin of 380 votes to 26, a package of economic reforms designed to tackle the country’s 1.9 trillion euro debt, revive its economy and prevent it from going the way of Greece.

After the vote, the 75-yearold billionaire media baron held a final meeting with his cabinet and was then driven home to his official residence. There he consulted with party advisers, the final step before going to the presidential palace, on Rome’s Quirinale Hill, where he handed in his resignation to Italy’s president, Giorgio Napolitano, 86.

The president released a statement saying that consultations on forming a government would start the following day.

Mr Berlusconi’s conservative PDL party said it would accept an emergency government run by Mario Monti, an economist and former European commissioner, if it kept to its remit of implementing economic reforms.

The party also said it wanted the emergency government to be limited to a fixed term, and demanded that it be consulted over the formation of a new cabinet.

Earlier, a crowd of about 5,000 people had jeered and booed when Mr Berlusconi arrived at the presidential palace in a cavalcade of cars.

They shouted “mafioso” and “buffoon” as he was swept inside. Thousands of Italians also gathered outside parliament and Palazzo Chigi, the prime minister’s office, blocking traffic and carrying Italian flags as some chanted, “Thief, go home!”. Mr Berlusconi told aides that the chanting left him “deeply embittered”, according to Italian news reports.

The austerity package, intended to restore market confidence and stop debt costs from spiralling out of control, had already been passed by the Senate, the Italian upper house, on the Friday and Mr Berlusconi had promised earlier in the week to step down as soon as the reforms were approved.

As he appeared in the chamber before the vote, his last as prime minister, Mr Berlusconi was given a standing ovation by MPs of his own PDL party, who chanted “Silvio, Silvio, Silvio”.

Despite the accusations that his colourful personality and lifestyle had brought Italy into disrepute, he served as prime minister on three separate occasions and remains the only one to have completed a full term in office, from 2001 to 2006. Mr Berlusconi’s departure came after the European Union and world leaders called for Italy to form a government able to tackle the country’s spiralling debt, amid fears that a default could trigger financial meltdown.

Mr Berlusconi bowed to intense pressure from international bond markets as well as to the realisation that with the desertion of loyal MPs, he no longer had a parliamentary majority.

Critics said he spent more time protecting himself from criminal investigations and entertaining young women at his notorious “bunga bunga” parties than governing.

Even with his departure, Italy faces a period of deep uncertainty as President Napolitano stitches together an emergency government of technocrats and politicians.

There was uncertainty before the PDL statement, and two other candidates for prime minister were being discussed – Angelino Alfano, Mr Berlusconi’s former justice minister, and Lamberto Dini, a former Bank of Italy official who headed a similar technocrat government during an earlier phase of political paralysis in the 1990s.

Italy would be “playing with fire” if it proved unable to form a new government under Mr Monti and give him a clear mandate to enact the reforms, the newspaper Corriere della Sera said on its front page.

Business leaders and most of the country’s big unions also launched a joint appeal for Mr Monti to be made the new prime minister in order to restore confidence in Italy’s ability to cut its debt.

There are serious concerns that a Monti government could be brought down within months by political infighting and an inability to push through the unpopular reforms, which have been demanded by both the European Union and the International Monetary Fund.

The great survivor: Page 13

By Harry Wilson and Kamal Ahmed EUROPE’S €1trillion (£854bn) rescue fund has been forced to buy its own debt as outside investors become increasingly concerned about the worsening eurozone sovereign debt crisis.

The European Financial Stability Facility (EFSF) announced two weeks ago that it had successfully sold a €3bn 10-year bond in support of Ireland. However, that target was met only after the EFSF resorted to buying up several hundred million euros worth of the bonds.

Sources said the EFSF had spent more than €100m buying up its own bonds to help it achieve its funding target after the banks leading the deal were able to find only about €2.7bn of outside demand for the debt.

This is seen as a major failure and a worrying sign of a future buyers’ strike after EFSF officials and their bankers had spent recent weeks travelling the world attempting to persuade key investors, including China’s national wealth fund and Japanese government funds, to buy its bonds.

Chinese and Japanese money was crucial to last year’s first bond sales by the EFSF, but the two nations are dismayed by the eurozone’s failure to resolve the debt crisis and alarmed at how the fund has become a rescue facility for European banks into a potentially €1trillion leveraged first-loss insurer for eurozone governments.

Other European Union funds are also understood to have supported the EFSF’s bond sale. The failure of the EFSF will increase pressure on the European Central Bank effectively to become the lender of last resort for the eurozone, a move that it has strongly resisted.

Continued from page 2

Cameron is pushing for “concrete and effective mechanisms” to “ensure essential economic interests of non-participating member states are fully protected”.

Last Friday was another crucial day in the ongoing crisis as Italian politicians voted on plans to cut public spending and delay retirement.

Greece finally installed a new prime minister – Lucas Papademos, a former central banker – and the country was expected to unveil its national unity government.

EU diplomatic sources indicated that Britain was fighting to resurrect the “Ioannina compromise”, which would allow a blocking minority of countries to stop the new eurozone vanguard bloc pushing decisions through the EU.

The mechanism, named after a meeting of EU foreign ministers in the Greek city of Ioannina 17 years ago, was abandoned by Tony Blair during negotiations for the Treaty of Nice in 2000.

A government spokesman said: “Discussions about possible further changes to the EU treaties are at a very early stage.

“But we are clear that any changes would need to protect the rights of those countries in the EU but outside the eurozone, and ensure that any additional enforcement measures would not apply to the UK as a result of our opt-out from the single currency.

“Any proposals to change the EU treaties must also be agreed by all member states.”

Jean-Claude Piris, a former senior EU official, has come out of retirement to work on a blueprint for the new union and its separate institutions. He is the éminence grise of EU legal texts and is credited with the Lisbon Treaty, the failed EU Constitution and their predecessors, the Nice, Amsterdam and Maastricht treaties. He has argued that it would be “far better” to create “an avant-garde group, probably based on the current 17 members of the euro area” than attempt treaty change.

“Willing euro members would conclude an additional treaty compatible with international and EU law,” Mr Piris wrote in a paper circulated two weeks ago.

“This would contain additional obligations for them, as well as a definition of the organs and rules that would govern their supplementary co-operation in the best way possible.” Mr Piris’s emphasis on “willing” members and “additional obligations’’ stoked rumours, denied in Paris, that Nicolas Sarkozy, the French president, is trying to build a smaller eurozone without any highly indebted or bailed-out countries.

Speaking last Thursday, Mrs Merkel insisted that Germany would not support a smaller eurozone.

“We have a single goal and it is to stabilise the eurozone as it is today, to make it more competitive, to make progress in balancing budgets,” she said. telegraph.co.uk/expat

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November 16 - 22 2011

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Quiet on the Western Front Landscape still scarred by war NEARLY a century after the First World War brought carnage to the verdant countryside of France and Belgium, Michael St Maur Sheil, a 65 year-old from Oxford, has taken a hauntingly poignant series of photographs of those battlefields as they are today.

The pictures, released in the week of Remembrance Day, show the ground that once formed the Western Front still littered with craters caused by shells during one of the most destructive battles in history.

Clockwise from left: a cemetery at Le Linge; munitions unearthed by farmers; the pockmarked landscape of Beaumont Hame; and the Lochnagar Crater, both on the Somme; and, above, the remains of Château de Soupir.

By Sean Rayment in Kabul and Patrick Hennessy MINISTERS clashed with Labour over the Armed Forces last Saturday in a series of rows that cast a shadow over the Remembrance weekend.

Philip Hammond, the new Defence Secretary, used his first full newspaper interview to tell The Sunday Telegraph that Labour had “failed” the military in Iraq and Afghanistan during its years in power, and had not supplied proper equipment – whether helicopters or body armour – to forces on the front line.

Jim Murphy, the shadow defence secretary, hit back, accusing ministers of bringing in a policy of “strategic shrinkage” of the Armed Forces as a memo outlining potentially even more Army redundancies surfaced.

Meanwhile, The Telegraph has established that as many as 2,000 British troops will remain in Afghanistan for at least 20 years, helping to train the country’s new army.

The official pull-out date for all serving UK personnel remains 2014, but troops will stay to train future Afghan commanders to British Army standards to help prevent the Taliban taking control again.

The commitment, which is far more long-lasting than publicly discussed by ministers, will be made next month at a conference on the future of Afghanistan.

The development came as Mr Hammond said Nato and the Afghans must negotiate with the Taliban to broker a peace deal, describing the insurgency as being “on the back foot”.

He said that Britain’s commitment to Afghanistan would be long and enduring, adding: “We are very clear that the international community is not going to abandon Afghanistan.”

Ministers were forced on to the back foot, however, by a leaked memo suggesting injured soldiers could lose their jobs as part of a major new unannounced round of cutbacks. It suggests 2,500 wounded personnel could go as part of 16,500 job losses by 2015 – up from 12,000.

The Ministry of Defence insisted that the contents of the memo – which had been written by a captain and then circulated to his fellow officers in Afghanistan – were not correct and that no more jobs were expected to be cut on top of the 12,000 already planned.

However, the officer in charge of planning the future force of the Army said that it had been prepared by one of his team as part of efforts to work out how to meet the Government’s requirement of Army job cuts.

Mr Murphy said that the Government’s “strategic shrinkage” of the Armed Forces was “being done by stealth”.

He added: “Nobody should be sacked because they are seriously injured while defending our country. This weekend is about remembrance, not argument.”

The row came as Grant Shapps, the housing minister, confirmed plans to ensure retiring service personnel are given top priority for council housing in a “positive discrimination” move.

Ministers have also struck a deal with Experian, the credit agency, to make it easier for soldiers to obtain home loans, and are also going to invest £16million extra in a fund for injured retiring troops.

By Adrian Blomfield THE Arab League has dealt President Bashar al-Assad the most humiliating of blows by voting to suspend Syria in a move that could pave the way for UN sanctions against his regime.

At a dramatic emergency session in Cairo, the bloc’s 22 members states gave overwhelming support to a resolution excluding Syria unless the Assad government ended all violence against protesters by Wednesday this week.

Underscoring the seriousness of its intent, the Arab League threatened to impose political and economic sanctions of its own if the bloodshed continued, and urged member states to withdraw their ambassadors from Damascus.

In practical terms, Syria’s suspension will be of little consequence; the Arab League is more like the Commonwealth than the European Union in that it cannot impose policy on its members.

But the decision was more than just symbolism. Mr

Assad, like his father Hafez before him, has cast himself as a champion of panArabism, an ideology espoused by Syria’s ruling Ba’ath party.

To be shunned by fellow Arab states represents a powerful message of repudiation that will not be lost on Mr Assad’s browbeaten people, more than 3,500 of whom have died since the uprising began in March. More than 100 have been killed in Homs in the past two weeks alone.

The decision also means the regime’s international isolation is complete. Until now, Mr Assad has tried to cast himself as a victim of Western plotting against the Arab world, something that will be harder to do with the disapprobation of his peers stated so resoundingly.

The significance of the Arab League’s decision was not lost on the Syrian people. Residents of Damascus crept on to their rooftops to let off fireworks as they made their feelings of jubilation clear.

Nor did it escape Syrian delegates at the Arab League meeting, who were said to have sworn as the results of the vote were read out. The resolution was passed unequivocally; with 18 states voting in favour and only Lebanon, long in Syria’s shadow, and Yemen, whose president faces an uprising of his own, voting against.

Unsurprisingly, Syria’s representative to the Arab League, Youssef Ahmed, sought to present the bloc as lackeys of Washington, claiming that the decision “served a Western and American agenda” and was taken to fulfil orders from the White House.

The Arab League’s move will crucially also heighten pressure on Russia and China to drop their objections to a UN Security Council resolution, pushed by Western powers, for sanctions against Syria.

Nabil Elraby, the Arab League’s secretary general, said there would be no call for military action in Syria. Even so, Russia and China – despite having strong strategic and energy ties with Syria – will now find it harder to remain obdurate, Western officials said. With additional reporting by Samer al-Atrush in Cairo