The head of the European Union's executive, Jose
Manuel Barroso, praised Italy's new prime minister Tuesday,
telling Mario Monti during his visit to Brussels that his debt-ridden
country faced "huge, but surmountable challenges."
Monti's technocratic government, which last week replaced the
center-right administration of Silvio Berlusconi, has been tasked
with implementing a series of EU-mandated austerity measures aimed at
reassuring market concerns over Italy's huge public debt.
"Europe and the world, I would say, have their eyes on Italy,"
Barroso said after meeting Monti. "I am confident that Italy will
pass this difficult test."
Italy's new leader "has my full confidence and personal esteem"
and "has the authority to guide Italy through this difficult moment
with a sense of urgency and direction," Barroso insisted.
Monti, a former EU commissioner and a respected economist, is
often referred to in the media as a technocrat. But Barroso called
him "a very committed, competent, experienced politician."
Italy should implement the austerity measures it has promised,
maintain a healthy primary surplus in its budget in order to reduce
debt, and take decisive action to revive its flagging growth, the
commission president said.
Monti, who needs to plug a budget gap to meet the EU-mandated
target of reaching a balanced budget by 2013, made no concrete policy
announcements.
With Barroso, discussions "focused on strategic economic,
political and institutional European Union issues rather than on
specific topics," he said, adding he would talk about Italian budget
issues with EU Economy Commissioner Olli Rehn in Rome on Friday.
On his maiden trip abroad, Monti also met EU President Herman Van
Rompuy, who warned that issuing joint euro area bonds was "not a
short term fix" for weaker currency union members like Italy.
Speaking a day before Barroso was due to unveil a paper on
so-called eurobonds, Van Rompuy said they could be introduced only
once "strict fiscal rules" were in place. Monti agreed that they
"should not be seen as a way to elude fiscal discipline."
Mutualization of eurozone debt "might represent the move into
full-blown fiscal union that could be needed to preserve the single
currency area in the long run. But opposition from Germany suggests
that, at best, such a move is a long way off," Jennifer McKeown from
Capital Economics commented in a note.
Berlusconi's government was widely blamed for exacerbating market
jitters on Italy by flip-flopping on economic reforms. But Monti's
arrival has failed to reverse the rises, which have taken Italian
bond yields close to unsustainable levels.
"No one is expecting miracles, at least in financial markets,"
Barroso said, acknowledging that Monti faces much hard work ahead. "I
was not expecting a magic change because of one or two
announcements."
In a separate speech in Berlin, Rehn said "Italy needs to deliver"
on deficit trimming and structural reforms, and warned that the
unprecedented monitoring that was imposed on the country by eurozone
partners will continue.
EU experts would "soon" return to Rome, Barroso said in Brussels.
They are expected to present a first report to the Eurogroup panel of
eurozone finance ministers on November 29.
On Thursday, Monti is scheduled to continue top-level EU contacts
by holding three-way talks in Strasbourg, France, with the eurozone's
two biggest players - German Chancellor Angela Merkel and French
President Nicolas Sarkozy.
Monti said he was happy to accept the invitation but noted that he
preferred sticking to "the community method" - meaning that he
rejects the idea that important decisions in the EU or the eurozone
should be taken by an inner core of countries.
