29.11.15
Italian economist, Mario Monti was sworn in as Prime Minister of Italy in November 2011, in the wake of the eurozone debt crisis to succeed Silvio Berlusconi. His government had introduced austerity packages to change the fundamentals of the country’s economy, and he is considered to have paved the way for Italy’s reforms that are being pushed forward by current Prime Minister Matteo Renzi. Former Italian Prime Minister Monti hoped the country’s latest reforms could reinstate “competitiveness of Italy’s economy, which is badly needed.” Maeil Business Newspaper met him for an interview at the 8th World Policy Conference (WPC) held from Nov. 20 – 22 in Montreux, Switzerland, and here is the Q&A:
Q: How do you see the future of the EU amid lingering concerns about one Euro because of terrorism, Grexit and Brexit?
▷A: I think that the European integration has always been built through reactions to crisis…. I don’t believe that we will see a GREXIT or BREXIT, so I don’t fear disintegration in this sense that one member of the eurozone leaving the eurozone or one member of the EU leaving the EU…. I am more concerned about the possible disintegration from within. That is not one member state, leaving, but each member state’s growing pressure by nationalistic, populistic, protectionist movement of political parties that seem no longer to appreciate the advantages of close cooperative working together or integrating with each other, which has been in my view, the key factor of post-developments in Euro. But see they want to give priority to the local, regional, national differences, and so on.
Q: In terms of the economy, what do you think about the future of Europe?
▷A: (Europe) in fact still is in a slow growth, partly because there was a financial crisis of many member states of the eurozone that has been surmounted. There has been big progress in domestic economic policies of each countries and improvements in the governance of Eurozone but they have been implemented slowly in town. Domestic demand of course is not helping growth. Terrorism, per se, fear comes from terrorism does not necessarily hamper economic growth. We’ve seen after the September 11 (attacks) in fact strong growth, also sustained by the long years of the very accommodating monetary policy conducted by (Alan) Greenspan of the Fed, (which) also created positive climate after terrorism…. But really crucial things … for the economy of the eurozone are concerns about refugees, migrants.
Q: What do you expect possible U.S. rate hikes to affect the global economy?
▷A: The global economy is likely to suffer shortly from the deceleration of China’s economy and sooner or later, probably sooner rather than later from an increase in U.S. interest rates…. So what seems to be the greatest danger for the economy and finances of emerging countries. Even Korea’s strength is likely to feel the impact of this…. So it is more and more important that there should be effective coordination of policies through existing mechanisms in formal ones like the G7, G8, G20 as well as the formal ones like the IMF.
Q: Do you think the biggest factor that could affect the global economy is China? Or US interest rate hikes?
▷A: The global economy is interrelated so there is no single isolated issue. But if I were to pick one, a little discussed biggest issue of all underlying problems of the global economy is increasingly the short-term horizon in making political decisions in most countries…it is the case in many countries, it is the case in the U.S., so the more short-term political horizon there is, the less…the leaders think long term.
Q: How do you assess the achievement of Prime Minister Matteo Renzi’s reform initiatives in Italy?
▷A: He is pursuing economic reforms vigorously, he has obtained parliamentary approval…, his government is in the stage of implementation of these reforms and I think they are going in the right directions. They should favor greater competitiveness Italy’s economy, which is badly needed. So I basically support this and I hope that he’s able to pursue this reform agenda whilst not deviating too much from budgetary discipline that Italy will have to pursue for several years.
By Lim Sung-hyun