Italy's technocratic prime minister has no criticism of ratings downgrades – just of persistent policy weakness at the European level.
“If I ever dictated anything, it must have been what S&P had to say about domestic Italian economic policy”, he chuckles, before quickly correcting himself: “I never said the three letters BBB”, a reference to Italy’s new S&P rating of triple B plus. Apart from Cyprus, it is the lowest standing of any country in the eurozone not to have undergone a recent bail-out.
The reason for his pleasure is apparent as he reads from the report. “It’s very interesting when they go through the various factors, and concerning the political risk factor they say there is one negative: ‘The European policymaking and political institutions, with which Italy is closely integrated’”, he says. “And then they go on, saying, ‘Nevertheless, we have not changed our political risk score for Italy. We believe that the weakening policy environment at European level is to a certain degree offset by a strong domestic Italian capacity’”.
Mr Monti is careful not to challenge his counterparts directly. Asked whether the S&P analysis is a condemnation of Ms Merkel, who is widely viewed as the driver of the current response to the eurozone crisis, he is diplomatic: “I don’t think we can really single out one country or one person”, he says.
Later on, when asked how concerned he is that strikes by taxi drivers and pharmacists could derail his reforms at home, he insists that when he wakes up in the morning, he is more concerned with “European leadership” than domestic unrest. “European leadership – not the German chancellor”, he quickly clarifies.
Despite this diplomacy, his ensuing analysis directly challenges the Berlin consensus that financial markets will respond in a positive manner only to hefty doses of bitter austerity medicine. Growth and not austerity should be the focus of eurozone policymaking, Mr Monti says, and more effort should be made to drive down borrowing costs of the struggling periphery – a stance that German officials have pointedly resisted, fearing it will relieve pressure on Greece, Spain and, most prominently, Italy to reform.
Full interview (FT subscription required)
© Financial Times
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article