BRUSSELS — They may not have been the exact words José Manuel Barroso used during a lunch with the new Italian prime minister, Mario Monti, on Tuesday, but the message was clear: Welcome back to Europe’s top table.
After years of tolerating the leadership of the flamboyant, populist, scandal-prone Silvio Berlusconi, there was no concealing the warmth of the welcome Mr. Barroso, the European Commission president, had for Mr. Monti, the cerebral, pro-Europe professor who succeeded Mr. Berlusconi.
It is a sentiment sure to be echoed Thursday when the German chancellor, Angela Merkel, and the French president, Nicolas Sarkozy, roll out the red carpet for Mr. Monti at a meeting of the three leaders in Strasbourg.
Beyond the personality politics, the hope is that financial markets will notice the depth of European support for Italy now that a technocrat they trust has taken charge.
“He has my full confidence and high personal esteem,” Mr. Barroso said of Mr. Monti after their lunch Tuesday. “Mario Monti has the authority to guide Italy through this difficult moment.”
From Rome’s point of view, the arrival of Mr. Monti represents a chance to extend Italy’s influence and broaden out the French-German duopoly that has long dominated European Union politics.
“Even for France and Germany this would be good — objectively,” said Roberto Menotti, the senior research fellow at the Aspen Institute Italia.
The warmth contrasts sharply with a meeting in September between Mr. Barroso and Mr. Berlusconi in Strasbourg, in which the two politicians tellingly did not hold a joint press conference.
At the time the Italian media suggested that Mr. Berlusconi had only wanted to see Mr. Barroso to avoid appearing in court in Italy where he was involved in several legal cases.
Whether the welcome will last depends on Mr. Monti’s success in stabilizing Italy’s dire financial situation and cutting debt levels that have reached 120 percent of gross domestic product.
“Debt reduction is the name of the game,” said Fabrizio Saccomanni, the director general of the Bank of Italy, during a speech Tuesday in Paris. “We will have to find a way to recover in the least destabilizing fashion.”
Mr. Saccomanni indicated that the effectiveness of the Italian government had been questionable for several years because of showmanship, though he did not mention Mr. Berlusconi by name.
He dismissed the idea that Italy’s technocratic government led by Mr. Monti lacked democratic legitimacy, a point some commentators have made as they questioned the new government’s ability to push through austerity measures.
In Brussels, Mr. Monti said Tuesday that his government was focused on fiscal discipline and bolstering economic growth.
As a former member of the European Commission, the E.U.’s executive arm, Mr. Monti knows better than most that Italy, which was a founder member of the bloc that is now the European Union, has often punched below its weight, hampered by its fractious domestic politics.
E.U. leaders had long tired of Mr. Belusconi’s antics at their meetings. (At a summit meeting in 2003, for example, Mr. Berlusconi declared, “Let’s talk about football and women” before turning to the German chancellor at the time, Gerhard Schröder, who had been married four times, and suggesting he take up the conversation.)
Mr. Sarkozy and Mrs. Merkel this month had privately urged Italy’s president, Giorgio Napolitano, to put Mr. Monti in the prime minister’s job, according to a former top-ranking Italian government official who spoke on the condition of anonymity.
A professor and a regular on the Brussels research group circuit, Mr. Monti was picked by Mr. Barroso last year to write a report on the E.U.’s single market.
He not only speaks his native Italian and fluent English and French. His euro-speak is also strong.
“My vision of Europe is very much in line with Italy’s traditional vision,” he told reporters Tuesday, mentioning the “community method” — E.U. jargon for an approach that advocates the role of E.U. institutions rather than cooperation at the national government level.
Yet ultimately, Italy’s success or failure in combating its economic crisis will determine whether it stops being the problem child and, instead, attains new influence in Europe.
Mr. Saccomanni blamed political inaction at all levels for spread of the euro crisis to core members like France. “Now it is a planetary problem,” he said.
While acknowledging Italy’s high public debt and low economic growth, Mr. Saccomanni argued that fiscal discipline, low private debt, the lack of a real estate bubble and limited foreign debt offset those weaknesses.
Nonetheless, concern is mounting about the health of Italian banks, which have been affected by the sovereign debt crisis. Yields on Italy’s 10-year government bonds, which had spiked above 7 percent this month, traded at 6.79 percent on Tuesday. It is a level that unsettles markets, as it makes borrowing costs difficult to sustain.
While the high yields increase Italy’s cost of servicing its debt, Mr. Saccomanni said they would push Italy over the brink only if the yields remained at those high levels for the next seven years, a trend he said was unlikely.
Still, some of the largest Italian banks, like UniCredit, are suffering. While Italy’s financial institutions have limited exposure to the debt of other troubled euro zone countries, their holdings of Italian bonds are “sizable,” Mr. Saccomanni said. Those worries have put a liquidity squeeze on Italy’s banks, curbing their access to market financing — a situation other financial institutions on the Continent are also facing.
Analysts say they believe that before Italy can truly exert more influence in Europe it must attack its own economic problems.
“You have to reverse the trend and send a signal to the markets and rating agencies that we are going in the right direction,” Mr. Menotti of the Aspen Institute Italia said.
Liz Alderman reported from Paris.
Article source: http://www.nytimes.com/2011/11/23/business/global/rome-gets-new-respect-at-european-union.html?partner=rss&emc=rss