Press conference by the Italian Prime Minister, the President of the French Republic, the Chancellor of the Federal Republic of Germany and the President of the Government of Spain

Rome

Mr Monti: Today we have talked in some depth with President Hollande, Chancellor Merkel and President of the Government Rajoy about the main issues to be tackled at the next European Council meeting on 28 and 29 June. The aim is for this preparatory meeting of the four biggest economies in the Eurozone to help contribute towards the efficiency of the Community process. So this is not a meeting that could be said to be external to the Community process. We want to contribute in the best way possible towards the preparation of an effective European Council meeting.

We have agreed to acknowledge that since the start of the economic crisis the European Union has taken some significant steps forward towards preserving the integrity and stability of the euro. Today we have new instruments, even for countries with difficulties, that did not exist in the past.

In any event, we also agree on stressing the fact that what has been done so far has not been sufficient, in particular in terms of economic growth, the subsequent stability of the Eurozone and offering European citizens and the markets a clear plan outlining the medium and long-term prospects for European integration.

The first objective on which we all agree is to re-launch growth, investment and job creation. This has to be achieved either through structural reforms at a national level to increase competitiveness, or through a new agenda at a European level.

I believe that we have taken a step forward over these years in European culture and politics. We have to realise that growth cannot have a sound base if it is not carried out with discipline in the fiscal balances, and that disciplined balances run the risk of not being sustainable in the long term from an economic and political point of view if satisfactory conditions are not put in place for growth and job creation.

We are working towards a Europe-wide agenda, and we are working hard, as members of the European Council, with President Van Rompuy, with the President of the Commission Durao Barroso, and with the other partners, to achieve the specific goals of this European agenda.

At the next European Council meeting we will support a series of actions designed to re-launch the economy, investment and employment, extend competition in Europe and create a more united single European market, which is the main goal that has still not been fully achieved.

We would like there to be a significant package of measures for growth at a European level, in the order of 1% of the European Union's gross domestic product, which means more or less 130 billion euros. We are also working to ensure that within this vision of a growth package there is also a consideration of the quality or composition of public expenditure that recognises the value of certain investments.

We have renewed the common commitment to respect sound macro-economic discipline, which is essential for the stability and soundness of the financial system if it is to be capable of sustaining investment for the real economy and job creation; increasing capital for the European Investment Bank and increasing or making more effective use of Community resources to strengthen growth and competitiveness… I am not going to give you a long list here.

We also give great importance to the report that the group made up of President Van Rompuy, President Durao Barroso, President Juncker and President Draghi is preparing on the prospects for European economic integration in the longer term. That is very important, as I said, both in terms of involving European citizens in what is such a significant undertaking, and in giving markets a clear perspective on the irreversibility of this great project that has so far had a great deal of success: this project called the 'euro'. And obviously, we also place a great deal of importance on the mechanisms to stabilise the financial markets.

I am going to stop here. I would like to thank my colleagues for the very constructive contribution they have made to this meeting, and I would now like to give the floor to the President of the French Republic, François Hollande.

Mr Hollande: First of all, I would like to thank Mario Monti for his invitation here, to Rome, and his initiative.

This meeting is in preparation for the European Council meeting to be held on 27 and 28 June. The European Council meeting must lead to progress in order to give confidence to the Eurozone and Europe. I believe that our meeting today has been useful in achieving this objective.

First, we have talked about the growth package, which is essential. We have set a figure: 1% of European GDP should be mobilised with a timeline that is as close as possible to that of the new mechanisms that we are going to have; in other words, we should be able to mobilise this finance in the shortest possible time. This 1% of GDP amounts to between 120 billion and 130 billion euros, and I think it is a good objective.

Then we talked about a common vision of Economic and Monetary Union, about a roadmap for each stage of the Union: monetary union, banking union and the instruments that reflect this will to work together.

The third objective is to ensure that we can make full use of all the mechanisms that currently exist to stabilise the markets, boost confidence and fight speculation.

So the European Council meeting could, if we achieve these objectives, be a significant milestone for Europe.

In addition, we could add on the tax on financial transactions - I am going to continue working on this and believe that I have been well received here with respect to this proposal.

That is my summary of what we have done today.

The four main economies in the Eurozone, without judging in advance what other countries may also decide, have set out some joint objectives and we have given this growth outlook a very specific content. We are also aware that we must send a sign, a sign of cohesion, a sign of coherence, a sign of stability and a sign of solidarity, and I believe that is what we have done today.

Ms Merkel: Thank you very much, Mr President. I would also like to give my sincere thanks for the fact that we have been able to meet here. I believe that it has been a meeting of the four most important economies in the Eurozone held at the right time and that with this meeting we want to make clear that we are doing everything possible to fight for the euro, as our currency, as a currency that we all use.

What has to be done is that in the future it should be as stable as it has been in the last ten years. To ensure this, we have to overcome certain problems, although some things have already been done. Our countries have applied many reforms and above all, we have created sound instruments, and supportive common instruments.

In the current discussion, the issue of jobs, of creating jobs for people, is being tackled much more intensely now after we have dealt in detail with the Fiscal Compact and budgetary issues. For the next European Council meeting we have to send out clear signals and I fully agree with everything that has been said by those who spoke before me: 1% of the gross domestic product of the common European area to be invested in growth and other investments is the correct signal to send.

I am also very happy that the four of us can today say that we support a tax on financial transactions. People in our countries still have the impression that the crisis came about as a result of the international financial crisis and that the financial markets are still not participating sufficiently in the solution.

Third, we have a problem, which we want to resolve in the medium and long term, and in this respect we can send a positive message today: we must make our political links closer, above all in the Eurozone. Those who have a common currency must have a harmonised common policy, which is also something that the last three years has taught us. It is something that I always call political union. We have to work more towards closer political union.

Herman Van Rompuy, José Manuel Durao Barroso and others will submit some proposals to us on this matter, but these four countries represented here - and Germany is particularly committed on this point - will provide all we can so that in our respective countries there can be a debate and we can say that Europe is drawing increasingly closer together. The lesson of the crisis is not less Europe, but more Europe. That is the signal that we can send out today.

Thank you very much for your wonderful hospitality this excellent atmosphere.

President of the Government: Thank you very much and good afternoon.

I would like to begin my turn, which will be short, by thanking Prime Minister Monti for his initiative, his reception and his treatment of us.

It has been, as all those who have spoken have said, a very pleasant meeting, in which we have debated sincerely on subjects that at this time occupy our countries and the European Union as a whole.

As nearly everything has already been said, I will simply point to five matters on which I have seen substantial agreement, and end this speech with three comments, which are the points that have been most important to me today.

First, I believe that there has been agreement here between all of us on the need to control our public deficits and not raise the public debt of our respective countries excessively.

Second, there is agreement on carrying out structural reforms at a national level to improve the flexibility and competitiveness of our economies and thus achieve greater economic growth.

Third, there have been references by those speaking to some of the proposals that will be raised at the upcoming European Council meeting, and there is also an agreement on carrying out structural reforms at a European Union level.

Fourth, those at this meeting have stated our firm will to implement all the mechanisms that are necessary to achieve financial stability in Europe.

Finally, we have made a clear and determined commitment to the future of Europe: we want more Europe, we want a political union, we want an economic union, we want a banking union and we want a fiscal union.

And now three comments from me that I believe are of particular importance and in my opinion sum up this meeting.

First there has been an unquestionable commitment on the irreversibility of the euro, which is undoubtedly the most important project that we Europeans have implemented for many years.

Second, there has been agreement among all to implement all the mechanisms that are necessary to achieve financial stability in the Eurozone.

Finally, there has been a commitment to more European integration in the future: banking, economic, fiscal and political.

Thank you very much.

Q: In light of the message today from these four powers representing most of the European GDP, what can we expect from the conclusions of the next Brussels Summit?

Mr Monti: We can expect enough. The European Council represents all of us and others; so it is not a third entity that is not part of us.

We are here today to actively contribute to the European Council with the construction of a strong, progressive consensus, which involves growth and involves stability. The European Council is headed up by its president, Herman Van Rompuy, and we have considered that if four countries as important as ours and as different in terms of their conditions can find a line of convergence between them, this should be of great benefit in reaching a significant consensus at the European Council. So this is something that we can offer to President Van Rompuy and our colleagues at what will be a very important meeting.

We expect that the work carried out all these months… because we should not forget that each of the heads of government present here has promoted progress on European questions with his or her own government and own colleagues.

Europe is a very important construction, a very sound construction; but not always very dynamic in the short term. We have to help it to develop, and so following the latest contributions that we have made here today, we expect that the conclusions from the European Council may be even more sound and credible than those of preceding Council meetings with respect to growth perspectives for the European Union; that they may give a clear medium or long-term line for economic, financial, monetary and banking integration, with some aspect of political integration; and that these conclusions of the European Council meeting, and the joint and supportive form in which they are taken, may satisfy the expectations of the financial markets that the euro is here to stay.

Q: My question is for President Hollande. Mr President, you have put growth on the European agenda, but you have put the subject of the 'eurobond' within a ten-year time-frame and are preparing a drastic plan to reduce the deficit. In the end, is German-style rigour finally going to impose itself on growth? And for the purpose of European integration, are you ready to accept the purchase of sovereign bonds?

Mr Hollande: I believe that the eurobond has to have a ten-year time-frame. As there is greater union and integration, the eurobond will be a useful instrument for Europe and I will continue to work in this direction and to put this mechanism within a time-frame.

Second, growth. Who would have said only a few weeks ago that it would now be on the agenda of the European Council?

Since the G-8 meeting, where Mario Monti, Angela Merkel and I met, we have had the G-20 meeting, and before that was the formal European Council meeting; and growth, given the situation, has become a priority. Does this mean that countries have to reject budgetary rigour? Absolutely not. We have been implementing this policy for some time and the result has not been bad; considerable efforts have been made, sometimes tough efforts in terms of public opinion.

I believe that budgetary efforts have to be made, in France as well. That does not mean that they have not been made until now - anyway, I am not going to make any comments on French policy in the past. But in fact wanting growth means ensuring that this budgetary adjustment is not only one of austerity, because I am against austerity.

At the same time, I know that we have to send a message of harmony and stability; and thus of confidence. That is what we are doing today and that is what the European Council meeting must do. Its role is at the same time to send a very concrete message supporting growth: those 130 billion euros that can be committed; it is also a very firm message to fully use the stability mechanisms; and finally, to define a medium-term vision of Europe that precisely includes solidarity, of which the eurobond is an example.

The loss of sovereignty will be dealt with according to the elements of solidarity that we can find. There cannot be a transfer of sovereignty if there is no improvement in solidarity and harmony.

Q: Could specific decisions be taken with respect to and with a view to Brussels? Are there any indications in this respect?

Ms Merkel: We are preparing for the European Council meeting. There are four of us here, and of course we are going to provide this Council meeting with our ideas, we are going to talk with our partners and there is a good chance that others will agree with what we have decided here and consider it reasonable. We are of course going to defend it.

But it is important that the President of the Council, Mr Van Rompuy, should know what Member States can do and what they are prepared to do when it is a case, for example, of recapitalising the European Investment Bank. National parliaments have to take the decisions and that is why we are making our contribution to growth.

I believe that the important message today is to announce that growth and sound finances are two sides of the same coin. Sound finances are a prior requirement, but they are not sufficient if there is no growth and jobs are not created and employment does not rise; and this is the most urgent problem in Europe. That is why we are going to take a further step forward, and I would like to highlight the fact that the four of us have decided that the introduction of a tax on financial transactions is something conceivable, and that is very important.

The third message is that we need more Europe. On the one hand, solidarity, and on the other, competiveness, cooperation and cohesion, form part of a whole. If there is a lack of solidarity, there is a lack of control. In the past Europe had a Stability and Growth Pact, but it was not respected, there was no compliance. It is not that there are no rules in Europe. Our problem, rather, is that we have lost confidence because all too often we do not obey our own rules. This situation has to be restored and to do so we need more Europe. For me, today's positive message is that all of us are going to participate to continue making progress along this road.

Mr Hollande: I would like to answer - following an old French tradition - a question that I was not asked.

Angela Merkel talks about a tax on financial transactions. It is true that those of us here are in agreement on this tax and that it can only be based on a formula of closer cooperation. I will act together with my partners to ensure that the European Council authorises us to implement this closer cooperation so that we can introduce the tax on financial transactions as quickly as possible. We are debating it now.

Ms Merkel: The ministers of finance have also talked about this and we will pass their opinions on to the Council.

Q: My question is for Chancellor Merkel and the Spanish President of the Government Mariano Rajoy. I would like to know if you agree that the bailout funds should be used to buy the debt of countries in difficulties.

If so, how much should be available? Should it have conditions? What should these conditions be and what should the red lines be for the Spanish President of the Government?

If they should not be used, why does Chancellor Merkel not allow the ECB to inject money directly into the banks, when France, Italy, Madrid, Obama and tonight the International Monetary Fund has asked it to do so?

Mr Rajoy: I understand that the final part of the question was not for me. The first part was.

I believe that currently the EFSF can buy debt on the secondary market in accordance with the conditions established and approved at the time. So I have nothing more to say, except reflect what is an objective reality. The EFSF can do so; and, given that it also did so once, as everyone knows, the European Central Bank can do so in exceptional circumstances.

In any event, I believe that there is not much point in going into detail here. I believe that one of the most important things we agreed on today is one of the things I said in my initial presentation: we have all undertaken to implement all the mechanisms needed to achieve financial stability in the European Union.

That satisfies me; it is a clear, determined and understandable commitment to the irreversibility of the euro. I believe that everyone now understands exactly where we are going and we have also agreed to move towards greater integration in all respects. And I am extremely happy about this meeting because of its content, because of the people I have been with, and also because of you and being in this city of Rome which is one of the most beautiful in the world.

Mr Hollande: That is a subject we could talk about. We should talk about it.

Ms Merkel: It is, at least, a very beautiful city, that is true.

I am going to take up the second part of the question. It is not a question here of allowing or not allowing. The EFSF and also the ESM are supportive mechanisms and each country, with its guarantees, contributes so that a country in difficulties can be helped.

I have said that responsibility and control go hand in hand. In other words, for me, for the taxpayer in Italy, in Germany or in France, which is the authority that guarantees we are working so that everything can be in order? For me, in this case, it is the Spanish State, because naturally the Spanish State can say to its banks "you have to modify this or the other, you have to do these things or those things in another way." But if I simply give money to a Spanish bank or any other bank - I don't want to focus on Spain in this case - I can do that, but I can't tell the bank what it has to do because as the German Chancellor, I don't have the capacity to do it in another country; I can do it in my country, to my banks. It cannot be done, according to the Treaty.

That is the problem. It is not that I don't want to give money; it is that the Treaties are facts, so that the Member States are partners together; and we have funded the EFSF and the ESM based on these conditions. And that is how I will act.

You mention President Obama. We have a structure that does not exist in any other part of the world. There are seventeen of us with the same currency, but we all have national parliaments and we all have our national sovereignty. In some points we have ceded our sovereignty to Brussels and now we have to ensure that the necessary political structures are created for our common currency so that, as has been well said by the French President, there is greater control, greater responsibility and greater Community collaboration. Control and responsibility are two sides to the same coin.

Mr Monti: I think that our time is up and I would like to conclude with two observations. The first is that if there may appear to be an exaggerated insistence on the rules in terms of European construction, I would like you to consider that nearly ten years ago, in 2003, Germany and France, with the authorisation and complicity of the Italian Presidency, broke the euro rules and it has taken us practically ten years to reconstruct the credibility that was broken, not by Greece or Portugal but by the leading countries in the euro. That shows the importance of rules.

The second is that the request for more Europe, which today has been made clear by all of us, has been expressed today in Rome, where the construction of Europe began. I would like to give my warmest thanks to my colleagues. Their presence in Rome today to discuss together how we can take a further step forward in the construction of Europe has demonstrated that, once more, all roads lead to Rome.

Thank you.