Wednesday

20th Mar 2019

Monti: Europe shows signs of 'psychological meltdown'

  • Monti: the euro-crisis has the 'characteristics of a psychological meltdown' (Photo: consilium.eu.org)

Italian Prime Minister Mario Monti sees the "signs of a psychological meltdown" in Europe, which built up during the crisis and risks destroying the European project, unless governments act quickly. Even at the expense of parliamentary democracy.

Speaking to German magazine Der Spiegel in an interview published on Monday (6 August), Monti said "problems need to be solved quickly," if a total breakup is to be avoided.

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"The tensions accompanying the eurozone in the last years already have the characteristics of a psychological meltdown of Europe," he said.

In his view, governments need to preserve their upper hand when negotiating solutions to the crisis, even if this means less powers to the parliaments: "If governments were bound completely by the decisions of their parliaments, without preserving any negotiating space, Europe's collapse would be more likely than a deeper integration."

His words point to the powerful Bundestag in Germany, which is hampering Angela Merkel's crisis response as all money-related decisions have to be approved by the German parliament.

German lawmakers were quick in lambasting Monti's remarks.

"Greed for German taxpayers' money is blossoming undemocratic blooms in Mr Monti," Bavarian Conservative Alexander Dobrindt told Welt Online.

Liberals and Conservatives from Merkel's coalition also said the rights of parliaments need to be preserved, especially as the crisis is demanding more and more bailouts.

Meanwhile, talk of Greece's euro-exit is returning to the German debate, with Markus Soeder, Bavaria's regional finance chief, telling Bild am Sonntag that the country "should quit by the end of the year."

"Any new aid, any easing of the conditions would be the wrong path," he said, only a few weeks after Germany's economy minister said the feeling of "horror" at the prospect of a Greek exit has evaporated.

The German remarks prompted Greek Prime Minister Antonis Samaras to warn that this kind of rhetoric is making it even more difficult for Greece to stick to harsh austerity demands.

On Sunday, the 'troika' - of EU, European Central Bank and International Monetary Fund (IMF) officials - stated that talks on €11.5 billion worth of spending cuts had concluded for now with "an overall agreement on the need to strengthen policy efforts," but that they need to return to Athens in early September to continue the discussions.

"Talks went well, we made good progress. We will take a break and come back in early September," the IMF's mission chief for Greece Poul Thomsen told reporters in Athens.

With a €3.2 billion bond maturing in August and no further bailout money to be disbursed until the troika gives a green light, Greek officials have warned their state is running out of cash quickly.

The country's top bankers are not helping the situation.

The former head of bailed-out ATEbank, which was split up into its good and bad parts, on Sunday admitted sending millions of euros abroad.

"It is €8 million, mine and my family's. It is legal, reported and taxed and part of the family's wealth, the level of which justifies [the transfer]," Theodore Pantalakis, former ATEbank CEO, told the Realnews paper.

Germany gets its way on ECB bond-buying

The ECB has said it "may" buy Spanish and Italian bonds, but only if governments first sign reform pledges with the eurozone's bailout fund - a German demand.

Greece running out of cash as talks continue

Coalition partners in Greece have so far failed to agree the details spending cuts required by international lenders to unblock more aid, just as a minister warned cash reserves are drying up.

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