3 Giugno 2012
The fiscal situation of Greece started to decline since 2008. The European Commission was aware of this but did not react in time -as a matter of fact some countries treated Greece in a, let us say, Shylok’s spirit. Do you think that the EU also bears responsibility for our country’s collapse ?
This is a question that has already been written about a lot and my mandate at the European Commission ceased end 2004. I think we need to look ahead, not back, to what needs to be done and wh ere our common interests lie.
Was it necessary for the eurozone to invite the IMF to participate in the economic support mechanism for Greece? Didn't Europe have the means to deal with the crisis o r did Greece serve as a "guinea pig" in order to intimidate other countries with deficit problems of the consequences?
Again, I don’t think it is useful, at this stage, to analyse the past management of the crisis. The EU and the IMF are providing financial assistance, and Greece needs to continue to build on the substantial work it has already done to cre ate
a stronger economy, as the people of Portugal and Ireland are doing. The Italian people are also h aving to accept sacrifices to achieve a balanced budget next year and put the debt firmly on a downward path. At the same time they are contributing a significant share of the assistance to Greece and the other countries in need. We must focus on the efforts that are required and which can be alleviated with a stronger emphasis on growth-enhancing measures.
Do you think that Greece could renegotiate the Memorandum? In your opinion, which specific aspects could be changed? If the Greek government run out of money at the end of June would you recommend a bridge loan until the troika evaluation?
It would not be responsible for me to speculate on what the government formed after the elections will do, nor what EU Member States would decide collectively. I sincerely hope that the Greek people will vote to keep the euro, because it is the best guarantee of a stable and prosperous future. Too often in the past governments in Greece and elsewhere yielded to short term policies that led to high debts and competitiveness problems which they tried, and failed, to resolve through currency devaluations that merely resulted in higher prices and interest rates. The euro forces discipline on politicians. They did not understand o r accept this during the first 10 years of the monetary u nion. But this discipline is the best guarantee for citizens that political decisions take account of the general interest,rather than the interests of organised groups, political clienteles o r of politicians’ careers.
It is clear that deregulated markets did not achieve the results intended both in the United States and the European U nion (banking sector). Is there a need of a new regulation scheme and a more active role of the state?
I believe a lot has been done and continues to be done to better regulate and supervise markets and financial institutions. However the situation we are in at present goes deeper and has to do with the vicious interaction between the necessary reduction of debt levels,the recessive effect this is h aving on the economy and, consequently, on banks. Put more simply, as the State spends less and taxes more, people see their purchasing power diminished, which is in turn causing lay-offs and plant closures, resulting in an increase in bad loans for the banks. The way to break this vicious circle is to find a middle ground between that stimulate growth and budgetary consolidation and measures that stimulate growth and cre ate jobs, bearing in mind that there are no quick, one-size-fits-all solutions. The May European summit already provided some welcome answers, for example by favouring targeted investment. To give you another example here in Italy we are fighting to avoid a second VAT increase in a year, by carrying out a relentless fight against tax evasion and reducing spending that is not strictly necessary.
In your opinion is Europe doing enough to cre ate a new architecture in the financial markets and to review the role of the credit rating agencies? Is the European Central Bank doing enough to help solving the crisis? Should it be more active in bond markets?
I think the ECB has done an excellent job to help the euro area throughout this crisis.I am sure that it will continue to do whatever it deems necessary and appropriate to preserve the euro, in the full independence that was conferred on it by the Treaty and which is crucial for its credibility.
Are you aware that the European institutions o r even some national governments are preparing for a possible exit of Greece from the eurozone? Do you fear that if Greece is forced out, the contagion will spread to other member states?
I am sure Greece will stay in the euro area because, above all, I am profoundly convinced this is in the best interest of the Greek people.
Do you believe that the eurozone has reached a crunch time between moving forward to a closer fiscal u nion o r facing the danger of a break up?
I believe the euro area has already gone a long way towards closer integration. Before the crisis there was no question about bailing out a country and today we have three countries receiving financial assistance and a permanent mechanism to deal with future problems.Although it also faces difficulties and high financing costs, Italy is providing a fifth of that assistance and of the contributions to the European Stability Mechanism, not so different from the contribution of France o r even Germany. All partners in the eurozone need to show collective responsibility and a sense of common interest to pull us out of this crisis together.We all have a part to play and we all need to play it, putting aside any prejudices o r misunderstandings because what we have built together is worth much more than the sum of any selfish and illusory national interests.
Would it be better if countries li ke Greece adopt a parallel currency until they manage to stabilize their economy?
I strongly believe Greece's interest lies in the euro area.
You have invited three other European leaders Angela Merkel, Francois Hollande and Mariano Rajoy to a mini-summit next month in Rome, to discuss growth plans. Do you think that the initial programme for Greece has failed in that area? Is there a need for a European Marshall plan to spur growth?
I am a strong believer in the Community method, according to which all EU member states decide together as equal partners. The EU institutions also each have a clear and important role to play. But I also believe it is good for individual members to see each other and discuss positions and options, particularly at this difficult juncture. The EU meeting of 23 May showed that a growth agenda is gaining momentum, with measures now being put together by a high-level group ahead of the Summit at the end of June.
You are a supporter of Eurobonds. After how long do you believe that Eurobonds will yield profits for the week countries of Europe?
I believe we will have Eurobonds in one form o r another because our u nion is becoming more integrated. However we must be absolutely clear in our minds that this is not a license to spend at the expense of others, but rather to re-build the Economic and Monetary U nion on a stronger and more credible basis.
There is concern about the banking system and deposit flight. Are you in favor of a European system that would guarantee the deposits?
The euro area has been clear in stating that it will do whatever is necessary to ensure the stability of the euro area and the future of the euro itself.
In your opinion is the sacrifice of the welfare system and the changes in labour legislation inevitable in order the countries to achieve fiscal discipline and competitiveness?
I believe that the welfare system must be reformed so that future generations can also enjoy its benefits.I also believe that labour legislation can be made more flexible whilst providing an adequate replacement revenue for people who lose their jobs, and help them find another rapidly. This is what Italy has done with the reform of its pension system and what it is doing with the labour market reform.The alternative is to pay more taxes when taxation levels are already excessively high in Europe o r to condemn ourselves to a slow decline with no welfare system in the future.
Youth unemployment has become an epidemic in the eurozone. Do you agree with those who say that there might be a very well educated but lost generation?
The rise in unemployment, particularly youth unemployment, in some countries is the most acute and painful problem in this crisis. As a number of countries have plunged again into recession, it is important to agree rapidly measures to sustain economic activity and encourage job creation at the EU and at national level w hile not losing sight of the budgetary consolidation and reform process.
In your opinion is the strengthening of the radical parties, both left and right, in Europe an alarming situation?
People are clearly signaling that they need hope. They know and accept that efforts are needed to correct the mistakes of the past in terms of public debts that were allowed to increase beyond sustainable levels o r reforms that kept on being postponed. They know this is an uphill struggle. But they need to have hope there is an end in sight. They cannot find themselves rolling back down and havin g to start again. Right now we need to listen and take care of the economy in the knowledge this will also help fiscal consolidation.
