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.
Most Popular Stories
- Apple Wants Samsung to Pay $22M for Patent Dispute Legal Bills
- NASA Fellowships, Scholarships Bring Diversity to Workforce
- Twitter Coming to Phones Without Internet
- Dish Network Leads 2013 Top 50 Advertisers List
- Networks Vie for U.S. Hispanic TV Viewers
- Ad Counts Rise in 2013 for Hispanic Magazines
- Jobs Report Brings Cheer As Unemployment Drops to Five-year Low
- Starbucks Gets Grinchy; No Gingerbread Lattes for Tampa Customers
- Entravision Initiates Quarterly Cash Dividend
- Warner Bros. Unleashes 'Hobbit: Desolation of Smaug' Merchandise