Report: Monti says Italy a "safe place"

Associated Press + More

By GEIR MOULSON, Associated Press

MUNICH (AP) — Italy is now a "safe place" amid market turbulence, Premier Mario Monti said in an interview published Saturday, pressing for Europe to turn its political energy to generating growth rather than further plans to strengthen budget discipline.

Monti's comments in an interview with the German daily Sueddeutsche Zeitung came ahead of a planned appearance at the Munich Security Conference.

The annual gathering of security officials is tinged this year by concern about the eurozone debt crisis and comes as negotiations over a second bailout for Greece drag on.

Monti was quoted as saying that "an uncontrolled Greek state bankruptcy would be bad for everyone" but officials will avoid it. "Nevertheless, I think Italy is now a safe place."

Monti's government has been trying to regain investor confidence by cutting public spending and reforming a sluggish economy. Italy's struggle with high borrowing costs is a cause for concern because the country is considered too big to rescue if it gets into deeper trouble.

Efforts to get a grip on the eurozone debt crisis, which to a large extent have been shaped by Germany, have drawn criticism for focusing on austerity rather than growth. Most European Union leaders agreed last Monday on a German-pushed pact to strengthen budget discipline.

"These budget rules have permeated every cell of the European body," Monti was quoted as saying. "The problem is off the table."

"Political energy should not be wasted now on particularly original ideas for budget discipline, but (used) for a growth policy," he added, according to the report. He said that markets are more and more looking not just at deficit-cutting efforts but also at economic growth.

As well as opposing jointly issued debt, or eurobonds, Germany has been holding out against pressure to increase the eurozone's permanent rescue fund, the euro500 billion ($650 billion) European Stability Mechanism, which is to start work in July. It has pointed to plans to review the fund's size in March.

Monti was quoted as saying that March is coming soon, so Europe can be "relatively relaxed" about waiting to reassess the size.

Speaking at the Munich conference, U.S. Secretary of State Hillary Rodham Clinton said that "security and prosperity are ultimately inseparable," adding her voice to calls for Europe to generate growth.

"We need a common agenda for economic recovery and growth that is every bit as compelling as our global security cooperation," she said.

"We remain confident that Europe has the will and the means not only to cut your debt and build the necessary firewalls, but also to create growth, to restore liquidity and market confidence," she told delegates.

"As Europe emerges from economic crisis, we have to work harder to reinforce each other's recoveries," Clinton said. "We know we have a ways to go as well."

The European Parliament's new president, Martin Schulz, criticized a "one-sided fixation on budget cuts" in remarks on the conference's sidelines.

"We urgently need investment" in Greece, said Schulz, a member of Germany's opposition Social Democrats. "The money is there, and the fact it is not done is based on, I think, ideological and not pragmatic reasons."

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.