Italian Prime Minister Mario Monti yesterday said the root of Europe’s debt woes lay partly in the irresponsible parenting of Germany and France during the bloc’s infancy.
Monti told reporters in Tokyo that because the eurozone’s two largest players had not abided by fiscal rules, they had set a bad example for the rest of the continent.
“The story goes back to 2003 [and] the still almost infant life of the euro,” Monti said. “It was in fact Germany and France that were loose concerning the public deficits and debts.”
The well-respected technocrat, who replaced billionaire media magnate Silvio Berlusconi in November as head of the eurozone’s third-largest economy, said the flouting of rules allowing for an annual budget deficit of no more than 3 percent of GDP was the issue.
He said despite recommendations, a meeting of ministers from EU governments had decided not to punish France and Germany for going beyond the deficit limit.
“So the two largest countries in the eurozone had the [deficit] with complicity of Italy, which was then chairing under the rotation system the council of prime ministers of European Union,” he said.
“Of course if the father and mother of the eurozone are violating the rules, you could not expect ... [countries such as] Greece to be compliant,” he said.
Monti, who was speaking during a visit to Japan, was a member of the European Commission in the early 2000s when it recommended sanctions be levied against countries that were running over-the-top deficits.
The European Council —- composed of elected politicians — vetoed the move.
Monti’s visit to Japan comes as Europe continues to stagger under the weight of runaway sovereign debt, with Greece at the forefront.
Eurozone finance ministers are meeting on tomorrow and Saturday in Copenhagen to decide whether to increase the size of their debt rescue mechanism amid resurgent concerns about Spain.
The Organisation for Economic Co-operation and Development said the refinancing needs of vulnerable eurozone nations could top 1 trillion euros over the coming two years, on top of cash needed to recapitalize banks.
Italy alone needs about 750 billion euros to finance its debt, while Spain requires around 370 billion euros over the next three years.
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