Mario Monti is beginning to reassert Italy’s role as a respected central player in Europe.
As this observer has hoped, Monti is building on his meaningful domestic reform program and is making his presence felt in European forums. His contribution is a positive one and deserves to be taken seriously.
Bloomberg reports today that Monti has expressed confidence about the future of sovereign bond interest rates in the distressed economies.
He noted that the spread between interest rates in Italy and Germany has narrowed from 5.8% to 3.2% since November. The spread in Spain that was 4.7% is now 3.2%. In a statement that might help soothe market concerns he suggested the worst may be over.
Referring to this decline he said, ‘I don’t see honestly any reasons why this course should not continue.’ A justifiably positive attitude from Italy’s leaders is a welcome change and is helping to restore respect for Italy among other nations.
Monti has had the courage to express his own views in the face of German hegemony. Another senior and responsible voice at the table can only strengthen the quality of debate in Europe. Germany should not call all the shots.
German Finance Minister Schaeuble added to concerns about a Greek failure on February 14 saying Europe is now better prepared for such an eventuality. Monti described this as ‘a rather unpredictable scenario’ and said, ‘better not to do the experiment.
European leaders meet March 1 and Chancellor Merkel has indicated she does not wish to discuss increasing the European bailout fund. Monti disagrees. ‘Size matters,’ he said. ‘If the approach to firewalls is constructive enough … Europe will be in a better position to face any further … crisis.’
Monti is ‘confident’ of an agreement among leaders in March but points out Germany does not want to discuss it on March 1. Asserting the independence of Italy’s position he said, ‘March has, luckily enough, 31 days.’
Italy is important; it is the third largest economy in Europe with, arguably, more room for recovery and growth than most others. Mario Monti has accepted the challenge.
The challenge for Italians is to find a way to keep Monti and his technocrats in charge well beyond the elections scheduled for March 2013. A return to populist politics will put at risk the significant gains in domestic policy and international respect he has achieved in less than six months.
By Stephen Lusher
Stephen Lusher served five terms in the Australian Federal Parliament. He worked around the fringes of politics before setting up Lush on Bondi, a trendy bar on Sydney’s Bondi Beach.
Frequent trips to Italy led to an inevitable love affair with Tuscany. He and his wife Cathy sold up in Sydney and purchased Il Mulinaccio in 2008.
Within two months of moving to the Chianti Hills he was diagnosed with throat cancer. The experience led to him re-focusing his life and priorities. After a few uncomfortable years he thinks he has it beaten.
His interests include wine, food, history, culture and travel.
He struggles with the Italian language and indulges himself in some occasional writing.