20 Maggio 2012
Interview with Italian Prime Minister Mario Monti
Aired May 20, 2012 - 10:00 ET
This is a rush transcript. this copy may not be in its final form and may be updated.
Welcome.
MARIO MONTI, PRIME MINISTER, ITALY: Pleasure to be here.
ZAKARIA: Let ask you, Prime Minister, first -- we'll talk about Italy, but, first, I got to talk to you about Greece. There is, in a sense, a bank run taking place. Greece is going to be unable to finance itself unless there is some kind of massive help from Europe. Can Greece stay in the euro?
MONTI: I think Greeks want to stay in the euro. Not all Greeks are ready to do whatever is necessary to stay in the euro.
But I think as we approach the 17th of June election date, the feeling in Greece that it's crucial for their country -- I believe also for Europe, but certainly for their country it's crucial to stay in the euro with focused minds and political programs on putting together a collective willingness to do so.
Certainly, Europe cannot, of course, abandon or even substantially undermine and reduce the commitments it asked of Greece in order to help it. I think an equilibrium will be found.
But whatever is achieved on Greece in this very difficult situation will not really allow Europe and the euro-zone to breath unless a more substantive agenda of growth is decided upon in Europe to accompany fiscal consolidation.
ZAKARIA: But, in the short run, without the help from the European Central Bank, it is difficult to see how Greece will be able to meet just its basic day-to-day financing requirements as money leaves the country. Somebody described it as a bank job not a bank run, but slowly money is leaving Greece.
Is there a solution to this?
MONTI: Of course it is the most fundamental mission of the ECB, although it's not mentioned specifically, to see to it that the euro is safe-guarded in its integrity.
So I think against this background the ECB, the E.U. institutions and the Greek authorities or what is left of them in the process of reaching the new elections, will find a solution.
It will not be the first time in the history of the E.U. that when Europe is really bumping into the wall, all of the sudden minds are focused, political wills converge and a solution is found, but it is a critical situation.
ZAKARIA: When you talk about the need for a growth agenda in Europe, are you saying that the austerity program really haven't worked?
If you look at a country like Ireland, which have done everything it was asked to do or many of the things in terms of fiscal consolidation, cutting spending, raising taxes. It has not produced growth. It has not even produced much investor confidence.
Italy's budget deficit is up, its debt-to-GDP ratio is up largely because growth has collapsed. Should these austerity measures end?
MONTI: First of all, I don't like to speak about austerity. I'd prefer to speak of fiscal discipline. Fiscal discipline, in the end, amounts to austerity if it is not accompanied by other policies. Fiscal discipline, in my view, is there to stay. Italy has done huge efforts towards fiscal discipline and it is now the country which will -- in the European Union which will achieve a structural balanced budget before all the others next year, actually a slight structural surplus. And, yet, growth is not coming.
ZAKARIA: How does that happen? So you, in Italy, have -- you have -- as you say, you have done more fiscal consolidation than any country. You've done structural reforms as well. Now, how do you get that demand going?
MONTI: Exactly.
ZAKARIA: You need somebody to buy your products. Are you saying you want Germany to buy things from you?
MONTI: Well, we are gaining a better position in terms of competitiveness because of the structural reforms. We're actually destroying domestic demand through fiscal consolidation. Hence, there has to be a demand operation through Europe, a demand expansion.
As you pointed out, most clearly, we, for example, in Italy, are having problems because we have achieved very good fiscal results, but will they really be sustainable in the longer term unless the dominator, GDP, increases through growth.
ZAKARIA: What do you think it says about Western democracies that when one of the most important democracies, like Italy, the richest countries in the world got into trouble, you almost had to suspend democracy to fix it.
They have gone to an unelected czar, you, who has been asked to please fix it and then the politicians can come back in and do their mischief in a few years. But I mean it's a -- because there is an issue -- the problems Italy faces, all Western democracies face.
Over the last 30 years, there has been a build-up of entitlements, of goods and services being provided to the public from the state with no sense of -- you know, the kind of fiscal balance and the result is all these countries are in debt and the picture looks worse as people retire.
Can democracy handle this?
MONTI: Democracies have to handle this. How? Well, I believe the reason why democracies are very poor these days to handle this is that democracies, like markets, have become much too short-termist.
The combination of very important media of frequent elections, of even social networks, which tend to polarize people towards more extreme positions.
The combination of these factors has the consequence that, in democracies, politicians -- professional politicians tend to reject or only to embark into solutions that imply short-term costs and longer term benefits with great reluctancy only when they are faced with an actual huge crisis.
So the problem, to me, is how it's possible to reconcile classical electoral democracy, which, after all, we love, with a longer term perspective.
So I think democracy, in the long-term, in our countries will survive if it comes to be associated with leadership, will not survive if democracy plus media brings to us more and more followship rather than leadership.
ZAKARIA: Can you say confidently that what will come out of this crisis will be a deeper and more integrated Europe and not a Europe that breaks up in some way?
MONTI: I am confident and I would even say that the Greek crisis, if we take it since the first manifestations in early 2010, has confirmed very vividly that Europe becomes adult and stronger through crisis because we may be able or unable to ultimately solve the specific crisis in Greece, but in the process we have achieved a much higher degree of ex ante coordination of national fiscal policies.
We have put in place firewalls to reduce contagion effects. We have -- I mean -- the ECB in its autonomy has been able to find new techniques of intervention. So clearly, the governance of the E.U. has been improved by the Greek crisis.
Now, hopefully, one would like to see improvements in the governance of the E.U. without all times have a crisis as a trigger.
ZAKARIA: Mario Monti, pleasure to have you on, sir.
MONTI: Thank you very much.
