Economy & Finance

Italy doesn’t need German cash, Monti tells Germans

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BERLIN (Reuters) – Italy needs moral support from Germany but not its cash, Prime Minister Mario Monti said in an interview published on Sunday as German conservatives renewed calls for Greece to leave the euro zone.

The Italian leader also told weekly magazine Der Spiegel that he was concerned about growing anti-euro, anti-German and anti-European Union sentiment in the parliament in Rome.

The German government has resisted calls from Italy and struggling countries to introduce common euro zone bonds or take other action to help alleviate the bloc’s sovereign debt crisis, saying it would remove pressure to enact painful reforms.

On Sunday, a senior member of Chancellor Angela Merkel’s conservative alliance, Bavaria’s finance minister Markus Soeder, said Greece would leave the euro zone by the end of 2012.

“I’ll stay in office if all goes according to plan until April 2013, and I hope that I can help rescue Italy from financial ruin with moral support from some European friends, especially Germany,” Monti told Der Spiegel.

“But I say quite clearly: moral support, not financial,” he added. “I emphasize: not with financial help. But they should cut some slack to those countries that are following the European guidelines precisely.”

Monti pointed out that, while five euro zone countries have received or requested international bailouts, Italy has not yet received “a single euro” of help.

“I’ve got the impression that the majority of Germans believe Italy has already received financial aid from Germany or the European Union – that’s not the case. Not a single euro.”

German loan guarantees and contributions to the euro zone’s EFSF and ESM rescue funds total around 400 billion euros.

Monti added that Germany benefited from being in the euro zone. “It is the biggest beneficiary of the common market,” he said, referring to the country’s export-oriented economy.

The high borrowing costs Italy is paying are indirectly helping Germany, he added: “Germany is profiting from the low interest rates it is paying for its government bonds … the high interest rates, that Italy is now having to pay, is subsidizing the low interest rates that Germany is paying.”

Soeder, a leader of the Christian Social Union (CSU) that is the Bavarian sister party to Merkel’s Christian Democrats (CDU), said in an interview in Bild am Sonntag newspaper on Sunday that Greece should quit the euro zone.

The CSU has often been more critical of EU bailouts than Merkel’s party, and the German public has doubts about further guarantees for struggling euro zone nations.

“According to my forecast, Greece should leave the euro zone by the end of the year,” he said. “Germans can no longer be the paymaster for Greece. Every new bit of aid, every relaxation of the guidelines would be the wrong way to go.”

Soeder added giving Greece further financial help “is like trying to water a desert”. He also said: “At some point, everyone’s got to move out of mum’s house and for the Greeks the time is ripe for that now.”

Separately, German Foreign Minister Guido Westerwelle said it was his party, the small Free Democrats (FDP), that had fought hard to prevent the introduction of common euro zone bonds. The FDP is battling to stay above the 5 percent threshold needed to win seats in parliament ahead of next year’s election.

“Without the FDP in the German government, we would have had euro bonds a long time ago,” said Westerwelle, adding he would urge his party to take that issue “offensively into the election campaign. The FDP should make a central issue out of it.”

(Editing by Catherine Evans)

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