Mario Monti, interim Italian prime minister, talks with Lally Weymouth

Mario Monti, an economist and former university president, was asked to become Italy’s interim prime minister after Silvio Berlusconi resigned last November. He spoke with The Post’s Lally Weymouth at the Ambrosetti Conference in northern Italy this past weekend. Excerpts:


Q. You just met with European Council President Herman Van Rompuy. What did you discuss?

A. I suggested to President Van Rompuy that it would be good if he organized an informal brainstorming of the 27 heads of state of the European Union to reflect on whether the attitude of people vis-a-vis European integration is satisfactory or whether, as I tend to believe, the euro-zone crisis is creating resentments between the various countries of Europe. It would be very unfortunate if the single currency, which is the most ambitious part of the long process of integration, were to become the seed for . . . the political disintegration of Europe.

There is a big debate in Europe: Is the euro crisis leading to a deeper European Union or is the euro zone breaking apart? How do you see it?

Both things are true. The euro zone is not falling apart. Precisely because of the euro-zone crisis, European integration in the sense of more common policymaking is making progress. Like on previous occasions, crisis brings progress in European integration. Except this time, the use of money by some countries to support other countries is creating some acrimony. There has been a clear manifestation of this, in particular with regard to the Germans and Greeks.

How did you react to European Central Bank President Mario Draghi’s recent statement that the ECB would buy sovereign debt?

I welcome very much the decision by the ECB. It will feel free to buy on the secondary market government securities of the countries which are characterized by unduly high interest rates.

Will you ask the ECB to buy Italian securities?

Not for the moment, because we don’t see the need now. But the mere fact that the instrument has been put up has had the effect of pushing down substantively the spread for Italy and Spain[’s bonds] relative to the German government securities, which is proof that what the market wanted [was] the sign of a central bank that would be ready . . . to step in to save the market stability — of course, with some conditionality.

How would you characterize what you have accomplished so far?

We reformed the labor market in a way that will contain wages in the future. We reduced the deficit through austerity measures to the extent that it will be in balance next year. Also, we introduced a reform of the pension system, raising the retirement age and linking it for the future to the life expectancy of the population. We introduced many liberalization measures — new shopping hours, that is one. We introduced many measures in the area of competition, like preventing interlocking directorates — namely a director being at the same time on the board of two banks which compete. We unbundled the gas production from the gas distribution, so as to allow greater competition among the gas producers.

Do you believe that austerity is enough? Or do you need to focus on growth?

Austerity is certainly not enough. We need to have growth. Growth in any individual European country has to be the result of policies for growth pursued in that country consistent with budgetary discipline. But [there must] also [be] growth policies conducted at the level of the E.U. We are pursuing growth policies domestically through these liberalization measures, and we have been very active in promoting a series of measures that the European Council in June adopted to foster growth.

Do you see any way for Greece to exit the euro zone and not to harm the other countries?

No, I believe there is no way for Greece to exit the euro zone and not to harm other countries. It is also in the overwhelming interest of all other countries that Greece should stay in the euro zone but, of course, continue the deep process of fiscal discipline and structural reforms that it has embarked upon. What the Greeks are achieving is falling short of the requirements of the E.U. and the [International Monetary Fund], yet it is very remarkable. Normally, it takes a generation to have a change in culture and policies of the sort that we want Greece to achieve in three or four years.

Do you think it is unrealistic?

That they deliver fully is unrealistic. That they deliver to a sufficiently high degree is realistic — painful but needed. Under those conditions, and this will be the position of Italy, we should support Greece and its continued membership in the E.U.

If Greece goes, won’t there be a question of what country goes next?

That is one of the reasons why it is in the general interest that Greece stays.

What about your own future? Reportedly, a coalition could be formed in the next election that would ask you to stay on as prime minister. Would you be agreeable to staying on?

I really have not at all reflected on this topic. I have been so committed to running the country in these difficult months.

Do you want to become president? What are your future ambitions?

My political future on which I concentrate ends in the spring of next year with the elections. I conceive of my unexpected policy commitment as a short-lived one, and I want to bring it to good fruition for the country.

If you leave, are you concerned that Italy may go back to politics as usual — that the gains you were able to make will be lost?

Of course I am concerned about that. I am hopeful that will not happen because politicians have had time to reflect and are working for their rejuvenation. And also Italy, like other countries, is working under European constraints, which limits the degree of imaginative policies that any new government or parliament might bring about.

Italy has a vibrant manufacturing sector. Would you ever consider having Italy leave the E.U. so you could depreciate your currency?

It is good to have that question and to answer it with a resounding no. The Italian economy has many structural reforms still to undergo but the industry in Italy has strengthened as the result of having to work in a system of a fixed exchange rates without having the usual benefit of occasional, competitive devaluations.

Is it hard to keep asking the Italian people to make sacrifices?

It is painful for the government to ask for this and painful for the citizens to comply. Maybe if we were a normal political government, it would be even harder. That is why it is so important for me as prime minister and my ministers while we are on this job to detach ourselves from any speculation about the future. . . . People will understand that these sacrifices are necessary and will become hopeful that this puts Italy on a new, more productive and healthy course.

How long will this process take?

For the full process to be completed? Years. It is very unusual for a country to ask guys who are not politicians to come and run the country. So that you must take as a measure of how bad the situation was perceived to be.

Did you hesitate when [you were] asked to be prime minister?


And you understood how difficult the task was going to be?

Yes. I was asked to come in for 13 months or so, which would imply immediate, strong, urgent and tough actions to avoid Italy exploding financially and bringing with it the explosion of the euro zone. Since Day One, the U.S. and [President Obama] were unusually interested in what we did and very supportive.

Did you have a fight with [German] Chancellor [Angela] Merkel during a recent meeting?

Not a fight — a lengthy, constructive discussion. She has always been supportive personally [of me] and of the efforts of my government. At the same time, I and others in the European Union wanted improved governance of the euro zone and on some aspects Germany was not in complete agreement.

What do you mean by improved governance?

These instruments for stability, including the possibility for intervention by the ECB. We wanted more E.U. instruments for growth. We all agreed on this. Italy and others wanted more instruments for the E.U., including the E.U. stabilization mechanism, to be able to stabilize the government securities markets. Initially, Germany and Italy had two different views. Then in several discussions over the course of weeks and then in the final meeting of the June European Council, we agreed. Since then I have met Merkel several times, and we are working together harmoniously and constructively.

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