The premier on a visit to Rome: the commercial interchange is good, but can be improved. Discordant opinions on the euro and Eurobonds but “we are very close allies” on many issues

Italian Prime Minister Mario Monti with Czech Prime minister, Petr Necas,

Source: vlada.cz

After a roller-coaster tour between the U.S., Brussels, domestic and European commitments, Czech Prime Minister Petr Nečas arrived in Rome on a sunny day to meet Italian Prime Minister Mario Monti. A friendly meeting, highlighted by common opinions on many issues, but not all, as the Premier himself explained during a late sunny afternoon in Rome in the private room of a luxury hotel on the Dolce Vita avenue. Fatigued by numerous commitments, Nečas decided not to take a walk along the streets of the capital city that had been organized for him, but preferred to rest for a couple of hours in his hotel room. Common views on the excellent relations between Prague and Rome, where improvements are still possible. Same opinions on fiscal discipline and economic accountability, but a few divergent points of view, in first place the euro and euro bonds.

Prime Minister, how was your meeting with Monti?
My general assessment is very positive. Premier Monti is highly skilled on economic issues and our viewpoints are very similar and in a few cases, quite identical. Both of us place a lot of emphasis on fiscal discipline and economic accountability and both of us also want the completion of the EU single internal market and hope for an increase in the competitiveness of the Union. The Czech Republic and Italy are very close allies from this on this point.

What is the state of relations between the two countries?
I can say that relations between Prague and Rome are very good: in 2011 we reached nine billion of commercial inter-exchange and wish to emphasize that this amount is higher compared to pre-crisis volumes. In my opinion, there is great scope for increasing this inter-exchange as well as investments. Italy is the fourth largest economy in Europe, but as an investor it ranks in 16th place in the Czech Republic. We are keen to see this position evolve and that Czech companies become more involved in the Italian market. Our economy is small but very open and export-oriented: from this point of view the Italian market is very important.

You seem to agree with Premier Monti on many issues, but is Prague in line with the Rome-Paris axis regarding the Eurobonds issue?
Among friends it is normal to agree on many issues and disagree on others. We evaluate the Eurobonds with a large degree of scepticism, but as we are not part of the Euro zone, we do not feel entitled to give any advice to anyone. We fear, however, that the introduction of this financial instrument may result in the expansion of moral hazards in the EU countries and this could weaken the determination to implement needed structural reforms. I wish to point out that we are not part of the euro zone and do not take part in negotiations; therefore, if the Eurobond principle were to pass, we would not get in its way.

Prague has long delayed the announcement of a date for adopting the single European currency. What is the government’s current position?
I may confirm that the adoption of the euro is a commitment made during EU membership and that we wish to respect it, even if we cannot set a date. On the other hand, we have to recognize that at present we are not in a position to join the euro zone because we do not comply with all the conditions stipulated by the Maastricht agreement: the ratio between our deficit and GDP is higher than 3%. Nevertheless, we are examining and following its evolution very closely and have to admit that it is very much different today if we compare it to when we were considering the possibility of joining. In the first half of the last decade, in fact, there was the principle that other states did not have to guarantee for the debts of third countries – a basis that is no longer valid today.

Earlier this year, the position of your government on a number of anti-crisis measures at European level, such as the Fiscal Compact, had been strongly criticised. After many street protests against the government’s austerity measures – a similar situation to that of Italy – the attitude seems to have become more flexible.
I may say quite frankly that any government that wishes to put into effect a policy of accountability, fiscal and budgetary discipline is automatically exposed to protests and pressures. From this point of view I do not think there are any differences between Prague and Rome. On the Fiscal Compact, however, our opinions have not changed and we have a number of specific objections: we are in particular opposed to the fact that among its general rules, no obligation has been introduced to maintain public debt at a certain limit. In our country there is no consensus for the ratification process, but we see the argument as an “open question” and do not rule out the fact of joining in the future.

The crisis and the austerity measures adopted by the various governments throughout Europe have led to the victory of the “leftists” in various countries: France, Italy and Germany in first place. What is your opinion on this?
Elections are one thing, but taking care of the future of a country is a different issue. Europe must consolidate its public finances, reduce its debt and maintain fiscal discipline, and cannot any longer live at the expense of future generations: we need deep structural reforms and to modernize the economy by making it more competitive if we do not want to become a kind of decaying area of the globalized economy. Obviously, many of these reforms are painful and unpopular, but they are proper – and in the long run will bear fruit to Europe.

by Daniela Mogavero