Monti warns of mounting EU divisions, resentment
* Italy's Monti says divisions are greatest risk facing
Europe
* Suggests stripping public investment from deficit
calculations
* Says Italy recession no reason for more austerity measures
STRASBOURG, Feb 15 (Reuters) - ItalianPrime Minister
Mario Monti warned on Wednesday that the euro zone debt crisis
was fuelling dangerous divisions and resentment within the
currency bloc and said it was wrong to try to divide member
states into "goodies and baddies".
Addressingthe European Parliament in Strasbourg, Monti said
that while southern, so-called peripheral countries were widely
blamed for the debt crisis, France and Germany also carried
major responsibility for watering down the bloc's fiscal rules.
"Theeuro zone crisis has given rise to too many resentments
and re-created too many stereotypes, it has divided Europe into
central countries and peripheral ones; all these categories must
be decisively rejected," he said.
Monti said France andGermany originated the crisis of the
euro zone's Stability Pact in 2003 when, with the support of
Italy, they effectively dismantled the rules to forgive their
own lack of fiscal discipline.
"There are no goodies and baddies in the EuropeanUnion" he
said, rejecting the popular division of the euro zone into
virtuous northern countries and profligate southern ones such as
Greece, which is battling to stave off a default.
"We all have to feel commonly responsible both for what has
been done in the past and above all in the construction of the
future."
Frequently interrupted by applause, Monti said that while
Europe was right to strengthen fiscal discipline, this should be
accompanied by a greater emphasis on measures tohelp growth and
improve the workings of the single European market.
He reiterated his support for commonly backed euro zone
bonds, which are currently rejected by Germany, and said Europe
should at some stage consider excluding money spent onpublic
investments from calculations of budget deficits.
Monti said it was positive that budget performances were now
adjusted for the effects of the business cycle, giving some
breathing space for countries hit by recession such as Italy.
Data on Wednesday showed the Italian economy contracted by
0.7 percent at the end of last year, throwing it into a
recession expected to last for much of this year.
Monti said the worse-than-expected economic weakness was not
a reason for Italyto adopt more austerity measures on top of
the three deficit cutting packages adopted last year.
Recent declines in borrowing costs were not accounted for in
the government's most recent public finance estimates which aim
for a balanced budgetin 2013, Monti said, and this would help
compensate for the decline in output.
Italy officially forecasts a contraction of gross domestic
product of 0.4 percent this year, a projection now considered
unrealistic by all independent forecasters.
The International Monetary Fund sees a GDP contraction of
2.2 percent, while employers' lobby Confindustria forecasts a
fall of 1.6 percent and the Bank of Italy expects a decline of
between 1.2 percent and 1.5 percent.
...............................................
MONTI FOR PRESIDENT!
