Monti’s Virtue vs. Germany’s Vices

For once, Mario Monti had a sympathetic audience — dozens of European officials he mingled with and presided over during a 10-year European Commission career that, by the looks of it, he will remember more fondly than the 15 months as Italian prime minister which culminated in this week’s shellacking at the ballot box.

“One has to have clear priorities,” Monti quipped, explaining why he decamped to a Brussels regulation conference instead of staying in Rome for more political bloodletting. In a 30-minute valedictory, he defended his (incomplete) economic reforms and, in his hedged and elliptical professorial way, settled a few scores.

It was easy to recognize Silvio Berlusconi, the electorally reincarnated former prime minister, and clown-turned-politician Beppe Grillo as the target of Monti’s dig at “the most simplistic, some would say populist” forces. But his barb at “central and northern European” leaders was more striking.

From day one, Monti said, he did the right thing, by slashing the budget deficit and deregulating a wide swathe of industry. But it took too long for the reward — in the form of lower interest rates — to be bestowed by the aforementioned unnamed leaders who reside north of the Alps.

There is a “shortcoming,” he said, to the German attitude that countries will stray from the reform path without the pressure of high interest rates. A lower bond spread, and earlier, would have padded Italian growth, taken the sting out of his reforms, and averted the political mess.

“If no signal is coming back in terms of a decline in interest rates, then domestic political and public opinion, even in good faith, will tell you: Are you sure you’re pursuing the right policies?” Monti said. “If the gains from virtue are not seen, the insistence on virtue may be short-lived.”

Soon after taking office, Monti had warned of an anti-austerity backlash. Now that it has kicked in, he was too polite to say: “I told you so.” Monti will be a free man soon and, at 69, can comfortably retire. But if he needed a job, he’d have a better chance getting one in Brussels than in Berlin.

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