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January 17, 2012

Italy's PM Expects Agreement on Economic Discipline, Growth

by Al Pessin

Italian Prime Minister Mario Monti said during a visit to London on Wednesday that he expects to reach an agreement with other European countries, including Germany, on a way out of the current economic crisis that does not involve what he sees as unsustainable financial austerity for his country.  Monti met with officials, investors and students in London.

Prime Minister Monti said the fiscal discipline being imposed on Italy and other heavily-indebted countries is important, but not enough to get the continent out of its financial and economic crisis.  He said he wants countries that follow the European Union plan to be rewarded with lower interest rates and the flexibility to take steps to promote economic growth.

Economically-strong Germany has been the driving force in the European Union, insisting on austerity and offering little in return.  But Mr. Monti told a gathering at the London School of Economics and Political Science that he sees potential for a meeting of the minds.

“I’m rather optimistic now," said Prime Minister Monti. "I see different pieces coming together, which lead me to believe that we will have some silent, quiet, I hope quiet, coming together of different pieces.”

The Italian leader is expected to meet with his German counterpart and other leaders at the next EU summit at the end of this month.  He met with the British prime minister on Wednesday and he visited the London Stock Exchange for private meetings with the managers of large investment funds - trying to convince them to invest in Italy despite its economic problems.

Mr. Monti said the countries that use the euro need to restore confidence among investors, promote economic growth and explore ways to ensure prosperity across the continent, including the creation of Euro Bonds backed jointly by all 17 EU countries.

“All this in my view requires better governance of the euro zone," he said. "And, of course, Germany is one of the key interlocutors, if not the most key interlocutor, for this.”

The Italian prime minister said he expects European leaders to reach a final agreement on new fiscal discipline rules at the January 30 summit, and he believes that will make it possible to move forward on other important issues, including economic growth, restoring investor and consumer confidence, and lowering interest rates his country must pay to borrow money.

At the end of the event, when he was presented with a cap bearing the school’s logo, Mr. Monti said:

“I hope it is also symbolic of a soon-to-come cap on interest rates," he said.