23 January 2013

Mario Monti: Leading against the odds

Speaking at the WEF, Monti said that Italy had gained back respect and confidence in its ability to bounce back. "I see a very concrete interest of the business and investors for the opportunities Italy can offer for economic growth and for innovation."

I have governed with the strong conviction that leadership is the opposite of short termism. Short termism unfortunately exists today both in national politics and in European politics. Short termism means that Italy in the past decade did not use the opportunity of the membership of the eurozone to do reforms and reach a lower debt to GDP ratio. Italy wasted a significant primary surplus and lived on the illusions that we could promise change without ever delivering any real reforms. This is what one can describe as “promising reforms and ending up with taxes”. And with debt. And with a sovereign debt crisis.

Unfortunately, short termism also exists in European politics. I did see short terms in the initial European response to the crisis. For instance when we insisted that each Member State had of course to clean up the mess in front of its own house and we failed – however ‐ to recognise that the crisis had a systemic component. This slowness means the crisis ultimately became a crisis of confidence in the euro area’s ability to solve its problems and in the euro itself. It was a hard but very challenging fight intellectually and politically, for example, to convince my colleagues the head of governments of Nordic European countries that of course one had to do its homework as Italy was desperately doing, desperately but with hope of course doing.

I also see short termism when we take too long to recognise that for structural reforms and fiscal consolidation to be successful Europe has to act to sustain economic activity and tackle the growing public opinions resentment for job insecurity because of unemployment, loss of income and increasing inequalities. The Single Market, the role of productive public investments, the need to balance fiscal consolidation and growth are now at the centre of the EU agenda. Thanks also to the Italian pressure and I do hope that in two weeks European leaders will find once more the necessary leadership to agree on a pro‐growth and fair new Multi annual Financial Framework for 2020.  

Full speech