Monti requests moral support, but not cash

Mario Monti offuscato.jpg

Italy needs moral support from Germany but not its cash, Prime Minister Mario Monti said in an interview published on Sunday (5 August), as German conservatives renewed calls for Greece to leave the euro zone.

The Italian leader also told weekly magazine Der Spiegel that he was concerned about growing anti-euro, anti-German and anti-European Union sentiment in the parliament in Rome.

The German government has resisted calls from Italy and struggling countries to introduce common euro zone bonds or take other action to help alleviate the bloc's sovereign debt crisis, saying it would remove pressure to enact painful reforms.

On Sunday, a senior member of Chancellor Angela Merkel's conservative alliance, Bavaria's finance minister Markus Soeder, said Greece would leave the euro zone by the end of 2012.

"I'll stay in office if all goes according to plan until April 2013, and I hope that I can help rescue Italy from financial ruin with moral support from some European friends, especially Germany," Monti told Der Spiegel.

"But I say quite clearly: moral support, not financial," he added. "I emphasise: not with financial help. But they should cut some slack to those countries that are following the European guidelines precisely."

Monti pointed out that, while five euro zone countries have received or requested international bailouts, Italy has not yet received "a single euro" of help.

Italy has not received any bailout

"I've got the impression that the majority of Germans believe Italy has already received financial aid from Germany or the European Union – that's not the case. Not a single euro."

German loan guarantees and contributions to the euro zone's EFSF and ESM rescue funds total around €400 billion.

Monti added that Germany benefited from being in the eurozone. "It is the biggest beneficiary of the common market," he said, referring to the country's export-oriented economy.

The high borrowing costs Italy is paying are indirectly helping Germany, he added: "Germany is profiting from the low interest rates it is paying for its government bonds … the high interest rates, that Italy is now having to pay, is subsidising the low interest rates that Germany is paying."

Soeder, a leader of the Christian Social Union (CSU) that is the Bavarian sister party to Merkel's Christian Democrats (CDU), said in an interview in Bild am Sonntag newspaper on Sunday that Greece should quit the eurozone.

Bank of Italy chief underlines Italy needs no assistance

The CSU has often been more critical of EU bailouts than Merkel's party, and the German public has doubts about further guarantees for struggling eurozone nations.

Meanwhile Bank of Italy Governor, Ignazio Visco, used a weekend interview to support Monti’s assertion that Italy does not require financial assistance at this stage. Asked if Italy should ask for EFSF/ESM help Visco said: "For the moment it seems to me there is no need.

"Looking ahead, it will depend on several factors. If the markets convince themselves a turning point was passed, if Italy does not abandon fiscal discipline and steps up its efforts to promote growth, then there will be no need for a rescue fund intervention. Much depends on ourselves," he said.

Speaking to Italian daily La Repubblica on Sunday (5 August), Visco – who is also a member of the ECB's Governing Council – said last week’s (2 August) ECB meeting was an important "step forward" for the stability of the common currency, adding he doesn't see Italy tapping euro zone rescue funds for now.

Visco said that if the economy continues to slow down "we can expect a more accommodating monetary policy in the next few months".

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