Mario Monti: Sacrifices are not in vain
Europe is helping, but [Greece] must also help [itself] by pushing ahead,? Italian Prime Minister Mario Monti told Kathimerini. According to the Italian premier, Europe has already made a ?quantum leap for what concerns the stabilization and resolution of the crisis,? while on the subject of a Greek eurozone exit, Monti stressed that this is a scenario that ?nobody contemplates.?
You have made a lot of progress in Italy in terms of promoting reforms. Is there a point, not just in Italy, when the scope and the pace of further reforms becomes very difficult or even impossible within the limits of traditional partisan politics, parliamentary procedures and so on?
Budgetary consolidation and reforms are never easy and, sadly, they are often postponed until the last moment. This means countries often end up making the necessary reforms and efforts in bad times, under pressure from financial markets, instead of when the economy is doing well.
Aware that not only the adjustment process was postponed for far too long, but the situation was allowed to deteriorate year after year, the Italian people have been supportive of the effort, especially as they see that the government has put the fight against tax evasion at the top of its priorities. This is yielding results in terms of government revenues, but is also contributing to a change in mentalities thanks to strong actions and campaigns which do not hesitate to label tax cheats as parasites on society since they live at the expense of honest citizens.
The three main political parties from left to right have also supported the action of my government. Among other things, they have passed a property tax, increases in fuel excise duties and taxes on incomes on capital. They have agreed to a reform of the pension system, which increases the statutory retirement age to 66 years a further increase to 67 years is already in law. More recently they agreed to measures that reduce public spending in a structural way by 26 billion euros between now and 2014. This includes cuts in public sector employees, an administrative territorial reorganization and the introduction of competition at the level of local services. This was not easy as it reduces the influence of vested interests, including by political forces. A recent example where we reduced such influence in terms of appointments is in the health sector.
Besides the pension reform, we have increased competition in the economy at large from the energy and other network industries to professional services, made the labor market more flexible and fair, provided for speedier justice and are engaged in the fight against corruption.
The work is far from over and it has not been easy, but if we are consistent and fair in the distribution of effort, citizens understand it is for the general interest of present and future generations.
What is your advice to the Greek prime minister and the Greek people at this point, when frustration with the results of the fiscal adjustment is clearly on the rise? Do you think it is possible to obtain better terms and more time for the implementation of its program?
It would be presumptuous for me to provide advice on specific policies for Greece as I don?t follow the situation closely enough. Nevertheless, experience shows that the sacrifices are worth the effort. And the Greek people are not alone. Italy is providing nearly a fifth of the financial support to Greece as well as to the European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM), despite having a high level of debt and seeing its servicing costs increasing dramatically because of the crisis in the euro area and investors? doubts about our collective resolve to solve it. Without its contribution to the financial assistance, Italy?s debt would be a full three percentage points of GDP lower.
I welcome the economic measures recently decided by the Greek government as a clear sign of its will to reform the economy. We are convinced that Greece will respect its commitments, pursue the structural reforms it needs in order to boost growth and employment, and continue the painful but necessary process of fiscal discipline that it has embarked upon. Italy is aware of the ongoing efforts that Greece is making to overcome the crisis and it will continue to support the strong commitment of the Greek authorities at the bilateral level as well as in the European context.
In your assessment, is Europe ready to make sweeping, bold decisions regarding the sovereign debt crisis? Is that feasible within the current year?
Europe has already made a quantum leap for what concerns the stabilization and resolution of the crisis. Last June the European Council?s decisions were a major step in that direction. On that occasion we took decisive action to address tensions in financial markets, restore confidence and revive growth: A clear political message was given that a comprehensive and balanced approach between short-term and medium/long-term measures is needed in order to overcome the current economic crisis. The recent announcement by the ECB is also very important. However, the stability of the eurozone also depends on sound economic policies by member states. In the long run, deepening our economic and monetary integration and enhancing the effectiveness of the EU?s economic governance are crucial steps in order to complete the architecture of our Economic and Monetary Union and increase its stability, as foreseen in the Van Rompuy report to the June European Council.
Is a so-called Grexit a possible, acceptable scenario for the eurozone or would it bring unpredictable domino effects and costs to the world economy?
The exit of Greece from the euro area is a scenario that nobody contemplates, as can be read from abundant statements. Greece has already made a lot of progress and must continue the solid process of fiscal discipline and structural reforms because this is in its best interest. I?m confident the Greek government and people agree with this. They are not alone. Europe is helping, but they must also help themselves by pushing ahead on this virtuous path. Because it?s the only one that will allow them to emerge stronger, grow again and create jobs to retain talent at home, where it is needed.
