Quirinale Palace 03/09/2011

Address by the President Napolitano to the Ambrosetti Workshop in a video-link with Cernobbio

I would like to extend my warmest greetings to my friend, Professor Mario Monti, and to all the distinguished participants at this Forum. And I wish to say how greatly I appreciate the invitation to build a bridge, if you will, between the 150th Anniversary of the Unity of Italy and the issues on the agenda for Europe. I do not intend, naturally, to give you a summary, even a brief one, of the historic discourse and institutional reflection that have formed a common strand to the celebrations of that anniversary, celebrations that run throughout 2011. I will merely underscore that, from various points of view, a reference to Europe has been present in and central to our way of observing the past, present and future of Italy.

Italian Unification in 1861 was a historic event of prime importance in the Europe of that era. It was soon followed by German unification; with the arrival of Italy and Germany on the stage of great unified nation states Europe took on the shape that it held until the Second World War.

Italy played a part in the challenges and conflicts between states and alliances of states that torn our continent apart in the first half of the 20th century. Italy played a part, not least as a result of decisions that were mistaken in themselves and fatal to our country, such as the choice of fascism and the wartime alliance with Nazi Germany. But then, from the 1940s to '50s, a new democratic Italy really did come into being. As, in embryonic form, did a new European community, a new united Europe. In that new international context, and on new constitutional foundations, Italy was able to meet and win the hard challenges of the post-war reconstruction period. It was able to help found the European project, make extraordinary advances on the economic and social levels, and thus greet the first centenary of its unification by becoming a fully-fledged member of the area of most industrialised countries.

But in celebrating the experience of the Risorgimento and its victorious conclusion, and in retracing the long route followed in the united Italy's subsequent 150 years, we have not concealed or played down the burden posed by the underlying problems that we have failed to resolve as we developed. We have not hidden or underplayed the contradictions that have not been eliminated, or the persistent imbalances and tensions in the institutional, economic and social fabric of our country. There has been nothing triumphalist or consolatory in the celebrations of the One Hundred and Fiftieth Anniversary of Italian Unity.

We know well, and openly admit, that in the last decade in particular Italian economic growth has slowed, to the point of stagnation. It has been lower than the average rate of European growth, itself not high, and has reflected a negative trend in our nation's productivity. More in general, Italy, after making a strong contribution to the conception of the single currency, to the definition of the Maastricht Treaty and the shared political decisions that led to the birth of the euro, has not followed through by making all the necessary adjustments to bring its economic and institutional systems into line with this new reality. Some courageous decisions have been taken, which can be summed up as giving up monetary sovereignty and therefore any autonomous exchange rate manoeuvres. But other decisions were not taken. This is an issue for serious reflection by all the political forces who have governed our country, and by all our economic and social forces.

We procrastinated and held back from addressing more resolutely, coherently and constantly the binding constraint created by the heavy burden of public indebtedness we had built up previously. A constraint that we needed to loosen and cut free from. And we now feel, 10 years on from the adoption of the Euro, the full weight of that unrelenting constraint. Just as we feel the weight of the delay in resolving other essential questions and adopting the necessary reforms to revitalise productivity and growth.

I wish to say to the friends I see in this room, representatives of other European countries and institutions, that we are more aware than ever before of the absolute need for a change of direction. A change of direction that leads us to make up those delays, take courageous decisions and conduct ourselves in a rigorous manner, all within a rapid timescale.

This awareness has led to the unusual situation where the decree-law decided by the Government and issued by me on 6 July of this year - a decree-law containing urgent financial stabilisation measures - was debated and voted through in both chambers of Parliament in the record time of 9 days. This happened, moreover, in spite of sharp differences of opinion between the majority and the opposition; and thanks to a test of national cohesion that I, as President of the Republic, strongly hoped and called for.

That decree, the aim of which is to balance the budget in 2014, earned the appreciation of the European Council in its Declaration of 21 July. But it did not succeed in avoiding a crisis of confidence in the financial markets. A crisis that in late July-early August hit Italian government bonds very hard indeed. And that led the Government to discuss and submit to Parliament a new decree law designed, in particular, to bring that goal of balancing the budget forward to 2013. At the same time, the European Central Bank, with a strong sense of responsibility, was addressing the risk that had arisen as a result of the sovereign debt crisis in the Euro-zone.

The abrupt acceleration imposed by events clearly meant that the Italian government found it particularly difficult and controversial to take effective decisions to reduce the deficit-GDP ratio more rapidly than previously envisaged. It was equally difficult and controversial to take effective decisions with a view to achieving a true resumption of growth.

This led to the complex debate in which Parliament is currently engaged. A debate that the majority and the opposition are both committed to concluding as soon as possible, well before the 60-day deadline for confirming the decree-law of 13 August. They are also committed to respecting - independently of any amendments to individual provisions of the law - the overall budget goals already established.

Essentially, what we need from Italy now and in the immediate future is clarity and certainty of intent and results. The country needs to avoid any vacillation that could undermine the credibility of our position and conduct. Otherwise, we run the risk of falling once more into situations where old distrust and suspicions will re-emerge and weigh upon our country.

We all know, after all, that the hard toil of the decision-making process is part of the very nature of our parliamentary democracies. And in this period Italy's is not the only Parliament in Europe where difficult votes lie ahead, at the end of arduous debate. There can be no doubt that the world of politics in general is struggling to tackle the tensions and risks of crisis to which the Eurozone is exposed, and that the political and social equilibria within each country are being tested. All of us must follow these events in a spirit of mutual respect and shun any prejudice or simplistic views regarding the different latitudes in which Europe's member states are located.

Returning to the Italy of today, I will say that we are doing, and will do, whatever is required - especially to achieve a marked reduction in our public debt - in line, of course, with the agreements we have signed up to in a European context. But not in obedience to pressures from outside our country. We are acting in the interests of our country and its future generations. We are acting by enhancing and valuing - at all times - the factors that mean sustainability, including financial sustainability, for the Italian situation. Factors that include the soundness of our banking system and the low rate of indebtedness of our households. But we are not invoking these factors to avoid the imperatives of rebalancing and achieving stability in our public finances. Nor are we invoking, to that end, the many strong points of our economy. Strong points such as entrepreneurial dynamism in the service, first and foremost, of a rich manufacturing base, along with unique creative talent and excellent reserves of human capital.

We are doing and will continue to do what is necessary - and this is the test-bench for all of Italy's political and social forces - because we owe it to the common cause of the development of a united Europe. A cause in which we believe and to which we have been making an essential contribution for sixty years, and a development that needs Italy, with its great tradition and history. Just as Italy needs that development.

Dear European friends, we can and must all emerge together from the problems afflicting us at this time. We can do so by approving at an early date, during the Polish Presidency, the legislative package on economic governance. And we can do so, first and foremost, by lending strength to the instruments established to implement measures to combat the crisis within the Eurozone, without further uncertainties and reservations that would produce yet more instability and delicate problems for the ECB itself. Our guiding principle must be, even before solidarity, an awareness of our common European interests. And of the fact that those interests coincide - taking a far-sighted view - with the national interests of the individual member states, even, and including, the strongest of those states. It is the responsibility of each and every one of us - each accepting their own share of obligations and constraints. But it is equally in the interest of each and every one of us to safeguard the Euro and strengthen the potential and opportunities for sustainable growth by Europe in a period of grave unknowns for the world economy.

The challenges facing each of us echo what is our greatest and most decisive challenge: the challenge of pressing ahead on the road to closer economic and political integration, with greater coherence and courage than we are showing at present. We need to do so without weighing every decision against domestic considerations and political and electoral needs. We need to create clarity on the relations, which have become a little blurred, between the institutions of the European Union and the way that they function. We need to take an open-minded approach to the innovations that are now needed without procrastinating or taking a rigid stance on pre-conditions. We need to move on from a closed mindset and claims that do not enhance the profile of the Union or, indeed, of the national states voicing them. These seem to me to be the basic requirements, each of fundamental importance.

I hope that this reflection will make an effective contribution to the Ambrosetti Forum. I will press in every way possible to ensure that Italy plays a full part in this active reflection and provides an input of ideas and credible commitments that are worthy of its history as a founding country of our European home.