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Obama, Monti To Discuss Europe's Debt Crisis


And that settlement is, of course, a priority for President Obama. But so is the debt crisis in Europe. Today, he hosts Italy's new prime minister, the technocrat who succeeded the controversial-but-flamboyant Silvio Berlusconi last fall. Mario Monti has not yet turned around Italy's economy, but as NPR's Sylvia Poggioli reports, he's changed the government's image abroad.

SYLVIA POGGIOLI: The international media are singing Super Mario's praises. Some say, he's changing the dynamics of the EU. A Financial Times headline proclaimed: "Europe Rests on Monti's Shoulders." In just a few weeks, Monti's government passed groundbreaking budget cuts, pension reform and tax hikes. For the moment, market confidence is returning.

Maurizio Caprara, foreign policy analyst for Corriere della Sera, says the White House invitation seemed to come very fast.

MAURIZIO CAPRARA: This is a clear signal of how the American administration trusts the new Italian government. The role of Italy has changed. It is not just a problem, but a part of the solution of the problem.

POGGIOLI: As Europe's third-largest economy, but with a $2.5 billion debt, Italy is at the heart of the eurozone crisis. Yet Monti has challenged the strict austerity strategy championed by German Chancellor Angela Merkel. He insists it be accompanied by strong growth incentives; an economic policy that puts him on the same wavelength as the Obama administration.

POGGIOLI: But overhauling a stifling economic system is a daunting challenge. The real test will be eliminating professional guilds. Many Italians are resisting.


POGGIOLI: As soon as Monti issued his liberalization decree, protests exploded, by taxi drivers, gas station operators, and fishermen. Pharmacists, lawyers and notaries are also threatening to strike. They all belong to highly-protected cartels that establish membership, working hours, and prices.

Deputy Finance Minister Vittorio Grilli says vested interests block competition and prevent economic development.

VITTORIO GRILLI: Because they prevented especially the young people to enter a lot of business sectors in Italy. This sort of non-liberalization cost to Italy, they estimated about between 10 and 15 point of GDP, so I think it's quite substantial. So if we are successful, the impact on our growth and our GDP will be quite, quite remarkable.

POGGIOLI: But commentator Tim Parks, a longtime Italian resident, says in order to embrace Monti's reforms, Italians have to make a great cultural leap toward a national identity.

TIM PARKS: To take fairly lucid decisions as a corrective rather than splitting up constantly into pressure groups.

POGGIOLI: But to change Italians, Monti also needs European solidarity, something he told PBS's "NewsHour," is in short supply.

MARIO MONTI: The eurozone crisis has indeed brought about quite a bit of misunderstandings and the re-emergence of old phantoms about prejudices between the North, the South of Europe, and a lot of mutual resentment.

POGGIOLI: Monti warned that European leaders must ensure that these prejudices do not lead to the disintegration of the European Union.

Sylvia Poggioli, NPR News, Rome. Transcript provided by NPR, Copyright NPR.

Sylvia Poggioli is senior European correspondent for NPR's International Desk covering political, economic, and cultural news in Italy, the Vatican, Western Europe, and the Balkans. Poggioli's on-air reporting and analysis have encompassed the fall of communism in Eastern Europe, the turbulent civil war in the former Yugoslavia, and how immigration has transformed European societies.