Press conference by President of the Government and President of the Council of Ministers of the Italian Republic

Madrid

President of the Government.- Ladies and gentlemen, a very good afternoon to you. Thank you very much for attending.

I wish to begin this speech by welcoming to Spain, in a more formal manner now following the meeting we have just held, the President of the Council of Ministers of the Italian Republic, Paolo Gentiloni.

This is his first visit to Spain following his investiture on 12 December as the Head of Government of Italy and I wish to stress that it has been a true pleasure to receive him and his delegation today in Madrid. Thank you very much for this visit, Paolo; you are always welcome in Spain.

We appreciate that your trip to Madrid has been particularly difficult following the avalanche just a few days ago in the village of Farindola, in the province of Pescara, which left 29 people dead, as all of you are aware. I have personally conveyed to Prime Minister Gentiloni our deepest sympathies over this tragedy and reiterated to him that he can always count on the support of the people and the Government of Spain.

As you all know, Spain and Italy are two very close countries: we are European partners, friends and Mediterranean countries, and we share challenges, exchanges and important ties of all kinds. At a bilateral level, we have strong historical, cultural, social, tourism, and trade and investment ties. Recently, primarily as a result of our respective domestic situations, we have been unable to hold our annual bilateral summits. I am pleased to announce that today we have agreed to resume these summits and strengthen the institutional elements of our relations. Today's visit to Madrid by Prime Minister Gentiloni marks the start of this strengthening of institutional ties, which will continue to be strengthened by the visit to Spain of the President of the Republic, [Sergio] Mattarella, on 10 February.

At a European level, Italy is a country that Spain has been closely coordinating with through the European Union, both at European Councils, and at informal summits. Proof of this is precisely this visit to Madrid by Prime Minister Gentiloni, which has served to prepare for the Summit of Southern European Union Countries to be held in Lisbon tomorrow. This is fundamental, bearing in mind the complex challenges we are presently facing as European and Mediterranean countries.

Tomorrow in Lisbon, Prime Minister Gentiloni and I will have the opportunity, together with our counterparts from France, Portugal, Greece, Malta and Cyprus, to jointly tackle the main challenges that mark the present and future of Europe. Noteworthy among these challenges is the need to tackle the phenomenon of migration in our common role as countries on the southern border of the EU and through our cooperation with countries of origin and transit.

Also particularly worthy of our attention is the protection of our citizens both within and beyond our borders, the fight against the heinous scourge of terrorism using all of the instruments available under the rule of law, the withdrawal of the United Kingdom from the European Union, the strengthening of the Economic and Monetary Union and the Common Security and Defence Policy, as well as the boost we need to give to economic growth and job creation, particularly among our young people, who are key to prosperity and social cohesion.

Prime Minister Gentiloni and I fully agree that the most effective way to tackle these challenges is by strengthening our common European integration project. Europe has been and will continue to be the primary source of well-being for our societies. That is why at today's meeting we have started to prepare for another two important upcoming events, which seek to drive forward the European project: the Valletta Summit on 3 February and the Rome Summit on 25 March.

I have told Prime Minister Gentiloni that he can count on the Government of Spain for everything he may deem necessary in order to guarantee a successful Rome Summit, an important event that will coincide with the 60th anniversary of the signing of the Treaty of the European Economic Community. We agreed on our interest in this anniversary of our union being more than a mere commemoration. We need to push through measures that strengthen our capabilities to tackle the concerns of all European citizens.

We also had the opportunity to tackle issues of international politics that occupy and concern our two countries, such as the situations in Libya and Syria, and relations with Russia against the backdrop of the conflict in Ukraine.

Lastly, we also exchanged our impressions of the new United States Administration.

In short, this occasion has been an excellent opportunity to observe, once again, the privileged dialogue and friendship that unite Italy and Spain. Rest assured that we will continue to strengthen our ties to the benefit of both our societies.

Thank you very much for your attention and I will now hand the floor over to the President of the Italian Council of Ministers, Paolo Gentiloni.

Mr. Gentiloni.- Thank you very much. I thank the President of the Government of Spain, Mariano Rajoy, for his welcome and for this meeting we have held that has been so interesting and so important.

Italy and Spain can, I believe, play a fundamental role in the coming months, above all as leading players in the European Union. That is why, among the different questions we have discussed at our meeting with Mariano, the meaning of our commitment to re-launch the European Union has, above all, been at the centre of our talks. To this end, we will soon hold an informal summit in Malta which will then culminate, on 25 March, in a summit to commemorate the 60th anniversary of the Treaty of Rome.

This 60th anniversary will also be an opportunity to vindicate, I stress, to public opinion, to our citizens, the importance of the results achieved by Europe over these last 60 years. I believe that we are living in times in which the reaffirmation of these results and the values that are the foundation for these results is something that we should not ignore, and we should recall today how Europe has helped us move away from wars, from dictatorships, from the Cold War, and has guaranteed an acceptable level of well-being, the development of dialogue, of schools, of culture and of trade. We should not ignore anything in this 2017 in which we live and the opportunity in Rome will lie, above all, in confirming our commitment, that of Spain and Italy, to these founding values.

This summit, and we spoke about this with President of the Government Rajoy, will also be an opportunity to talk about the policies that are necessary to re-launch the European Union and which relate, above all, to managing migratory policies, and the possibility of taking more steps forward on the common security and defence policy - I believe that this may be one of the borders of a Europe that is making progress, above all with certain countries at the forefront - and, lastly, Spain and Italy's shared commitment to European Union policies geared towards growth, investment and a social Europe.

We have different backgrounds in terms of our economic crises; we have different backgrounds, but we have a point in common which is our interest, from a point of view of the European Union, in being aware of the importance of placing the issue of growth at the heart of our policies, with awareness and flexibility.

We have both spoken, and welcomed, the excellent bilateral relations that exist between Spain and Italy, which are based, as you would expect, and everyone in Italy is well aware of this, on our proximity, our cultural affinity, on customs, on meetings and trips, which is something that is perfectly clear; but these are relations that also have strong economic roots. Italy and Spain have trade exchanges amounting to almost 40 billion euros. We are pleased that we are the second placed country in terms of stocks invested in Spain and we are also pleased by the growing level, and we hope this continues, of Spanish investments in our country.

We collaborate in many sectors and the summit between our two governments that Mariano announced will also provide an opportunity for Spanish and Italian business leaders to meet up to consolidate and re-launch economic relations, which as we all know are so important.

We also spoke about different international issues that Mariano brought up which I shall not add to, and we spoke about the meeting to be held tomorrow between Europe's Mediterranean countries. There we have a shared fundamental interest in which political differences are not important; what is important is cultural affinity and a geographic neighbourhood. What is our common interest? Our common interest is raising awareness in Europe about our system of alliances, for example with NATO, and the tremendous importance of the Mediterranean, not only as the epicentre of a crisis but also as an opportunity for dialogue, for development and for relations with Africa.

I am pleased with all of these issues, dear Mariano, because today's meeting marks the turning point in strengthening the important relations between Spain and Italy that stretch back so far.

Q.- As Prime Minister Gentiloni said, the Italian Government and the Spanish Government share the idea of greater flexibility in the policies of the European Union, but at this time both governments must respond to the request from the Commission for them to correct their public accounts. I wanted to ask you both whether you are going to take any corrective measures and when.

And I wanted to ask Prime Minister Gentiloni whether Italy thinks that a procedure for an infraction may ultimately be imposed, with the consequences this could lead to.

Mr. Gentiloni.- I have said that the expression "corrective measure" concerns me a little; hence… Quite simply, I think that Italy needs to implement expansive policies, it needs to quickly tackle the need for more substantial growth and it must also counterbalance, and I am using European language, the exceptional circumstances, because it would be hard to imagine more exceptional circumstances than those we have suffered in recent times, particularly in recent weeks.

I trust that the European Union is not, in fact, deaf and blind to these circumstances. I have written to President Jean Claude Juncker and it would a terrible disservice to this institution if it were not accepted. We are negotiating, we are working and, as you know, I also said this to the Minister for the Economy in Brussels this morning. As always, we will respect the European rules, but we will do this without measures that could have negative effects and by confirming the continuity of the reformist action that Italy has set in motion in recent years.

President of the Government.- As you are aware, it is not easy to govern, not for those of us who have the responsibility to govern nations, nor, I imagine, for those at the European Commission. The European Commission must ensure that the rules are followed and the rules, in this case, that you have enquired after are our fiscal commitments and I believe we should help them. But I also believe that this is compatible with having sufficient delicacy to generate economic growth and jobs in each country, something which, furthermore, also helps to reduce the public deficit.

Spain's public deficit reached as high as 11%; we have reduced this in recent years to 4.6% and we have reduced this during a period of negative economic growth, during a recession. Spain suffered five straight years of negative economic growth and lost 10% of its Gross Domestic Product; we have now enjoyed three straight years of growth, the last two years at a rate higher than 3%, and this year, in 2017, we will recover the 10% of lost GDP.

We have a deficit of 4.6% and our goal for this year is to reduce it to 3.1%. The European Commission has been flexible at certain times, because in 2016, our deficit target was 2.8% and we were allowed to leave it at 4.6%, which is why I am saying that we all intend to meet our commitments on debt and deficit targets, and furthermore, this is good for generating economic growth and jobs; but I believe that this is compatible with having the delicacy to ensure growth and job creation.

Hence, rules are there to be followed, but people are there to ensure they are followed intelligently.

Q.- For the President of the Spanish Government. In the crisis that has sprung up between the United States and Mexico, I would like to clearly know on which side Spain stands, whether on the side of Mexico or on the side of the United States.

And for both leaders. Still on the issue of the Trump Administration, your counterparts in France and Germany have just asked for a joint response to the change of course in the White House. I would like to know whether you agree with your counterparts and whether you are in favour of holding a meeting at the highest level to address this question.

President of the Government.- The United States and Mexico are two allies of ours, as you know, with which we maintain very close relations. Not only Spain but all of the countries in the European Union share very important values with the United States, such as democracy, such as liberty and such as respect for human rights, respect for individuals. Our relations have always been good and, moreover, positive for both sides, for Spain, for the European Union and also for the United States, and we intend this to remain so in the future.

What unites us with Mexico is all of this plus our historical and personal ties; you also have language, culture and there are very close relations between the two countries and between the people from both countries. Many Spaniards went to Mexico in the past and many Mexicans came here; the same is true nowadays. Hence, there you have genuine, intense and friendly relations that stretch back a long time and which will endure in the future.

What we want, and we are convinced that this will happen, is for wisdom, sanity and common sense to prevail, as almost always tends to happen, and that relations between neighbours will be the same as those relations we want to have with all our neighbours.

As regards what those people you mentioned have said, I want to say that the European Union always maintains a united front. We are now dealing with one of the issues which are very topical at this time: free trade agreements. We negotiate free trade agreements as the European Union and, in fact, it is the European Commission that takes part in these negotiations. So, the European Union will maintain a united front, as has happened for many years now. This union began with only six countries, there are now 28 of us, although there is one that has taken a decision that you are all aware of. It will continue to be united and, furthermore, there is even an intention on the part of the countries in the European Union to become more integrated because we believe that this is the best course and that this will be beneficial for our citizens.

Prime Minister Gentiloni said this in his speech: we are about to celebrate the 60th anniversary of the Treaty of Rome, of when the European Economic Community was founded. Just look at how Europe has progressed over these last 60 years compared with the 60 years prior to this period which, among other things, witnessed two world wars.

Today Europe, despite some people being determined to criticise the decisions adopted and what is happening, is the region of the world with the highest standard of living; it is the region of the world with the highest levels of democracy, of liberty, of human rights , of respect for the individual, of integrated societies and of economic and social progress, and it has a welfare system like none other: a system of public pensions, a public healthcare system and a public education system. It sometimes feels like this just falls on our plate, but that's not the case; this is the result of hard work by many Europeans over many years. No-one else in the world has this and hence, as Europeans, we are all going to maintain this with the aim of continuing to work together and stepping up future integration.

Mr. Gentolini.- I would simply add that I believe that, when European leaders meet up, whatever the format of their meetings, they don't do this in response to anyone; they meet, on the one hand, and we will do this to celebrate our 60th anniversary, as Mariano reminded us, to confirm our values and our principles, which are extraordinarily modern, because to talk today about a free society, about free trade and about a social state does not only mean defining common areas, but also vindicating the characteristics of our countries and the successful history of the European Union, and this message has tremendous relevance today.

Furthermore, when we meet up, we try to improve the way we manage the problems we are facing: immigration, security and economy. This is the goal of European leaders and, if we do this well, then later we can propose the best way to forge our absolutely necessary partnership with the US Administration.

Q.- There was no government in Spain for a year because of a proportional electoral system, because of a highly fragmented political system. A question for Prime Minister Gentiloni. We became aware yesterday of a ruling on a consultation regarding our electoral law. Do you not fear that this search for a possible understanding between the different political forces in the long term may lead to a period of political instability and that this may also have consequences on the health, for want of a better word, of the government?

Mr. Gentiloni.- I believe that the government has no more than just two simple things to say on the matter: first, that we concern ourselves with the problems that are related to the activity of the government and the country, and we respect the decisions that Parliament and the political forces take, with the necessary speed in relation to the electoral law, because this is what needs to be done to ensure the smooth functioning of a democratic system.

Secondly, and I would say this to my friend Mariano, to the Spanish journalists and to all of you, there is no instability in Italy. There is a government that has unfortunately suffered an electoral defeat, a defeat in a referendum but which is continuing to work with the government that had been working in Italy for the last two or three years now; that is developing and updating many of the different issues of the electoral programme; it is taking the decisions that must be taken at this time and it has the same majority. We have even been accused of having a composition that is too similar to that of the previous government, which I consider to be wrong, and I would state this publicly.

Hence, Italy is a stable country that is continuing to operate together with the previous government.

Q.- I had two questions for President of the Government Rajoy. First, I wanted to know whether the government is satisfied with the resignation of Santiago Vidal or whether it has asked the Regional Government of Catalonia for explanations in view of the possibility that it has illegally obtained fiscal data, and whether the Tax Agency plans to open an investigation on this issue.

Secondly, in relation to the Budget, is the government now looking at the possibility of extending the previous Budget because it doesn't seem that much progress has been made in the negotiations? Yesterday the Basque Nationalist Party said that no-one had been in touch with them. So, do you intend to extend this or, in reality, are we immersed in a process, let's say, of being secretive, similar to the one we saw with the "ceiling on spending" whereby we will only find out the result at the end of the process?

President of the Government.- Those are two issues. In reality, I believe that the decision taken by the person you have enquired after is really a decision that seemed inevitable to me, because stating what he did in public is something truly concerning, don't you think? We all really need to behave in public life with a little more intelligence, common sense and sanity.

I don't know whether the Tax Agency will take a decision on this issue; what I do know is that the Public Prosecutor's Office has taken a decision to investigate these statements, because, if they are true, this would be a major problem. I have heard that the Regional Government of Catalonia has denied this, and that is reassuring, but I hope that the investigation opened by the Public Prosecutor's Office confirms that these statements are true because, in all honesty, it is quite worrying that this kind of thing is still being seen in the 21st Century.

In reality, this must serve for us all to take on board what all the people of Spain know: that common sense, restraint and dialogue are what is required to resolve problems, and exaggeration, radicalism and extremism lead absolutely nowhere.

In regard to the Budget, as you recalled in your speech, we have indeed approved something that is important - the "ceiling on spending" - the budget stability targets, which allow the regional administrations - both regional governments and local councils - to be aware of the spending rules and act in consequence; and finally, certain decisions on revenue. In other words, we now have a framework.

Aside from that, the extension comes into effect automatically. That is, in the event that a budget agreement is not reached, the Budget will automatically be the 2016 Budget, from which we will have to take out the agreements on non-availability of resources that we adopted during the course of 2016.

Now, if you ask me whether this will be the Budget for this year, the one I just mentioned, then the answer is "no". We are going to try and approve the new Budget and I am going to try to talk, as is my party, with all the political groups, prioritising those forces that supported us on the issue of the "ceiling on spending" and on other agreements I mentioned before. We have spoken with Ciudadanos, we had already spoken about the Budget with Ciudadanos before approving the "ceiling on spending" and we had even spoken about this before the investiture session was held. Talks are continuing; we are also talking with the Canary Island Coalition and there have been some preliminary talks with the Basque Nationalist Party; and we will make an additional effort in the coming days. There have also been contacts, and we hope to hold talks with the PSOE in the future, to see their position on the issue.

As you are aware, the government has 137 seats. With the support of Ciudadanos and the Canary Island Coalition, we will still need five more votes. We will try to get these from the Basque Nationalist Party, and if not, from the PSOE, through understandings, and the goal will be to present the Budget, I think, at the end of March at the latest. We should not present the Budget to Parliament later than at the end of March, but at this time, nothing is agreed and what is in force is what I mentioned earlier: the 2016 Budget, except… You have the revenue side, which, above all, affects Corporate Income Tax, and it is this Budget from 2016, except the Agreement of Non-Availability, that we also took from 2016.

Ladies and gentlemen, thank you very much. And thank you very much, Prime Minister.