Brussels, 15/06/2012 (Agence Europe) - The need for strong, swift action to protect the euro from market turbulence, support for keeping Greece in the eurozone, the need to focus more on growth, alongside the need for budgetary discipline in European policies, and deepening and strengthening the Economic and Monetary Union making it more coherent and effective, these were the main issues on which Italian Prime Minister Mario Monti reported a meeting of minds with François Hollande following the latter's first visit to Rome as head of the French state, on Thursday 14 June.
The visit, just ahead of major European and international dates -the G20 summit in Los Cobos, Mexico, on 18 June; the meeting of the same two, Monti and Hollande, with German Chancellor Angela Merkel and Spanish Prime Minister Mariano Rajoy, in Rome on 22 June, and the EU heads of state and government summit in Brussels, on 28-29 June - and at a time when the eurozone is coming under serious pressure, may presage a new Franco-Italian axis on all of these points, in counterpoint to a German government which has made budgetary rigour a prerequisite for any stimulus measure and which is determined not to allow itself to be sucked into “quick fixes”, such as eurobonds or a common European bank guarantee fund. The two leaders do not, for all that, want to isolate Germany and the Italian prime minister intends, during all of the above-mentioned meetings, to try to bring together the German position and that of the countries which are calling for immediate measures to save the euro and to kick-start growth in the short term.
Euro. Acknowledging that the efforts that have been made in the EU and the eurozone to combat the crisis and shield the single currency have not been enough, Monti called for “the weak points of the system to be strengthened”, through initiatives both on the financial system and the real economy. Hollande said that the means had to be provided to allow member states and banks to protect themselves against speculation. This, he said, requires “imagination and innovation” to create new financial instruments (eurobonds, bank guarantee funds) that will allow these objectives to be achieved. He observed that, despite the best efforts of numerous countries to consolidate their financial situation, these efforts have, for two and a half years, been nullified by speculative attacks on the markets, even though the real situation in these countries did not justify such attacks. This is a demonstration, the French president argued, that there is a “problem” in the eurozone which will have to be resolved as quickly as possible. For that reason, he will not be “satisfied with half measures” on this at the next European summit.
Growth. The two leaders stressed the importance of growth in European and national policies, and also the importance of productive “public, private or mixed” investment. “This does not mean putting budgetary discipline to one side or neglecting it”, Monti said, but “discipline alone is not enough to ensure growth, development and job creation”. That, he said, is why it will be necessary for “appropriate national and European policies to take pride of place”. The French president concurred, saying that growth is “essential if we wish to get things going again and if we wish to reduce deficits”. For this, instruments resorted to could be the EIB, structural funds or project bonds, but half measures will not satisfy the French president. “Amounts must be substantial” and not simply limited to national or intermittent funding, he said, adding that instruments are needed so that funding can be made available rapidly in order to kick-start economic activity. Also, when it comes to future investment financing, the EU should see what the different states are contributing and have a more flexible conception of how spending should be organised, he said (alluding to the sometimes over-pernickety handling of state aid). The French president asserted that he will place emphasis on growth at the G20 summit, at a time when growth is tending to slow down in the emerging countries also.
EMU strengthening. Regarding pursuit of this objective, which presupposes greater coherence, the two governments also agree on the instruments that should be used: - the establishment of a tax on financial transactions if necessary initially through enhanced cooperation (French position) to be applied to the EU as a whole if possible (Italian position, see also EUROPE 10633); - the issuance of euro-bonds - a working group to study the conditions for creating this instrument in the medium to long term; - European investment funds, etc.
Finally, the two leaders spoke of: - bilateral relations (development of trading relations, joint infrastructure and industrial projects) indicating that another bilateral summit will be held in Lyons at the end of the year; - the need to keep Greece in the eurozone (on these two points, see related articles in this bulletin); - and their firm condemnation of the Syrian regime and the need to toughen sanctions. (FG/transl.rt/jl)