Italy’s Meloni Discusses EU, Tariffs, Economic Plans: Transcript

The following is a transcript of a Feb. 25 interview with Italy’s Prime Minister Giorgia Meloni in her Rome office, during which she discussed the economy, how artificial intelligence will impact the work force, her views on the European Union and finally her relationship with France’s Emmanuel Macron.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — The following is a transcript of a Feb. 25 interview with Italy’s Prime Minister Giorgia Meloni in her Rome office, during which she discussed the economy, how artificial intelligence will impact the work force, her views on the European Union and finally her relationship with France’s Emmanuel Macron.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.The transcript has been lightly edited for clarity. The interview was done in Italian, Bloomberg News edited the English translation.Bloomberg: Let’s start with a figure we gleaned from the Bloomberg terminal, which indicates that international investors’ holdings of Italian public debt have reached a historic high during this government. At the same time, the spread is at a 15-year low. However, growth remains stagnant. How do you intend to stimulate it?Giorgia Meloni: Thank you for mentioning a couple of figures. I’ll cite a few others, because I think we should be happy with the results that the Italian economy has achieved in recent years, as the rating agencies obviously show, and as are also clearly demonstrated by the spread, which was around 235 points when we took office and is now stable around 60. This is clearly not just an issue of reputation but it’s a matter of economics because it means we save what would be spent on interest on the debt.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.One of the most interesting data points we have is on employment. 1.2 million people have found stable work in the last 3-1/2 years. Job insecurity is decreasing, unemployment is decreasing, and female employment is increasing — another very important issue for me, because we know that the gap in the Italian employment rate, compared to the European Union, also depends on female employment. So the issue of female employment has a very significant impact on us, and I consider this to be an important data point. I also consider important the issue of purchasing power, particularly the latest data, as well as the fact that wages have started to grow faster than inflation.Wage dynamics in Italy are also, as we know, quite complex, something that has dragged on for a long time, and things are slowly improving. Obviously, I don’t cite all this data to say everything’s fine, but to say that I think the strategy is right. What is the strategy? On the one hand, the element of stability in Italy has completely made the difference; we have to consider that. The stability this government has had — since stability also means predictability for those who invest, especially for those who invest — makes all the difference. And this is why I work and we work also with reforms, to maintain that predictability in our system and that stability over the medium term. Because here too, the issue isn’t reputational; it’s a very economic and very serious one. We have paid dramatically for the instability of our governments. We’ve paid for it in terms of resources, we’ve paid for it in terms of a lack of strategy. When you have a longer horizon, you can afford to put a strategy in place without spending the resources to get immediate results, because you have time to see those results.Which is what we have tried to do. We have concentrated the few resources that we had and kept our accounts in order. That in itself is an element of seriousness, not only toward investors, but toward citizens, because the resources we spend are citizens’ resources, on a few priorities that we believed would give the maximum multiplier and therefore clearly the issue of wage incentives. An economic system friendly to those who produce and those who invest. We have done it with a thousand measures, which we can talk about if you want but which I won’t list here. And I think we must continue working on the same strategy — that is, it’s true that in Italy there is a growth problem, obviously, and we also know that here too the issue is much more complex, right? We have an industrial production problem in an interconnected system which therefore also depends on the performance of the main reference economies. We have seen the industrial production data show how the situation in Germany has gone slightly better. There is certainly a growth issue. How do you incentivize growth, in my opinion? More or less like we are doing. The matter of investments makes the difference — the investment incentive and the structural investment incentive. That is, the three-year super amortization, the single Special Economic Zone for Southern Italy, in my opinion the three-year reference model is producing very important results in terms of growth. Southern Italy, which was always last, is now the driver. Employment is growing more than the national average, GDP is growing more than the national average, so for me the issue of investments is a priority and if I had to look at a reference model for the future, for the next budget laws, in my opinion it would be the issue of the single Special Economic Zone. Clearly, if you want to encourage growth, there are a series of other systems that come into play. There is the issue of infrastructure, and here too we don’t have to say much. I can invest in incentives as much as I want, but if I don’t offer the investor a favorable ecosystem, he won’t invest anyway. There has been an increase in investment spending here, a 300% increase, for example, on the road network in recent years. Clearly, the work of the EU Recovery Plan has also made a difference, but with greater investment in the Southern regions, there too. If Italy doesn’t all move at the same speed, it won’t be possible to generate growth in a real and structural way. There’s the issue of education, particularly in STEM subjects, the reform of technical institutes — that is, building a system in which the matching of supply and demand for work is increasingly easier and increasingly possible for what the market demands.This means a lot of work on innovation over time. In a time like the one we live in, there’s certainly the issue of energy prices, on which the government has taken some decisions that are quite courageous. We’ve worked hard on it, clearly trying to provide immediate relief, as we usually do for families and businesses, with €5 billion ($5.9 billion) invested to control the cost of utility bills for the most vulnerable families and businesses. This has a significant impact on many, both for medium-sized businesses and for the industry, a gas intensive industrial company with the government’s measures can achieve annual savings of €260,000.Bloomberg: You mentioned the €5 billion. We also know that this decree took a very long time to develop, including finding the resources to finance it. When we talk about all the initiatives and priorities you have for the coming months, we also have to talk about funding. Italy has reached a deficit/GDP ratio of 3%, which was what Europe requested, but there’s a sort of trade-off next year. Will it be further reduced by complying with European rules, or will we instead maintain a certain level of spending to finance tax cuts?GM: Well, look, I think we need to continue more or less the same strategy we’ve had in recent years; before we took office, our deficit was above 8%. Today we’re waiting for the final figures, but basically, we should be below 3%. But we haven’t implemented an austerity policy to achieve this goal, because an austerity policy would have compromised growth.We’ve sought a very difficult balance between keeping the accounts in order, and therefore being serious about managing them, and pursuing a policy that is as expansionary as possible, supporting growth. How? By concentrating resources, as I was saying earlier on what produces the greatest multiplier, we haven’t had much money to spend, but if you look at the budget laws of these four years, they’re always the same priorities: wage support, incentives for hiring, incentives for investing, the issue of training, the birth rate, which is another very economic issue from my point of view, because it’s a question of the sustainability of the welfare system, and the issue of healthcare. And so it’s not that we’ve implemented a policy whereby we’ve prioritized public finances over the needs of the economy. No. We’ve built a serious public finances policy, focusing on serious things that the Italian economy needed. We’ve certainly stopped spending money on bizarre things, that’s true. We’ve stopped spending money on a thousand different things, a bit on every front. We’ve developed a strategy that, in my opinion, is what makes the difference, and I think we need to continue along the same lines, maintaining seriousness in managing public finances without implementing an austerity policy.Bloomberg: The government’s influence has also been visible in specific sectors, certainly banking. The government has gradually reduced its stake in Monte dei Paschi, which in recent months pulled off the incredible acquisition of Mediobanca. Is the government’s role in Paschi concluded at this stage? And what do you hope for with this bank that has changed its composition? Does the third banking hub project remain in place, which could create competition with the duopoly of Intesa and Unicredit?GM: Monte dei Paschi is certainly one of those complex dossiers that we inherited and that we managed successfully. It’s not the only one, but it’s certainly one of them. We committed to a very ambitious rescue and recovery effort for this bank, and we did it. We did it to the point that, as you recall, not only is Monte dei Paschi a solid institution today, but it’s also such a solid entity that it has been able to carry out important market operations.Of course, when we completed our task, we relinquished our controlling stake in Monte dei Paschi. We retained a residual stake that today stands at around 4.9%, which clearly does not give us the possibility to exercise influence over governance.So I would say yes, the role of the government has ended, so much so that we have also announced that we will not participate in the appointment of new administrative and supervisory bodies. This obviously also concerns the issue of the third banking hub, because I have always stated that I am in favor of a third banking hub, and I continue to be in favor of a third banking hub, but it does not depend on us, precisely because we don’t have shares today — by choice — to control of Monte dei Paschi di Siena that would allow us to direct this process.Bloomberg: Generali is also part of this so-called banking deals frenzy, and it plays an important role because it holds billions in Italian savings, which contribute to the stability mentioned earlier. What role do you hope for Generali, precisely as a protection of what are, after all, Italians’ savings?GM: Look, obviously Italians are a people of savers, sailors, savers. And so clearly, whoever manages these savings, and the management of these savings, is a fundamental asset of the wealth that is produced here. What I can tell you is that I hope that those who manage these savings — and this doesn’t just apply to Generali, it applies to anyone who does it — and without us having the intention of imposing improper constraints, or limiting management, that’s certainly not the issue. I think our task, however, must be to understand the strategy of those who manage these resources. And my hope, obviously, is that these resources will be allocated to strengthening an economy that is proving itself well.Because they are resources collected in Italy from Italian savers, and for us it’s important that those resources can be invested to help strengthen the Italian economy in a virtuous circle that is positive for everyone.Bloomberg: Let’s now talk about the global economy, addressing the topic of tariffs, which was certainly in the news this week with the US Supreme Court’s decision declaring the tariffs illegal, thus sparking a response from Trump. A comment on tariffs, how can trade between Italy and the United States be protected? And you have a personal relationship with Trump, can this help in the dialogue that needs to take place on this issue?GM: Well, it has already helped, in the sense that certainly I did, and Italy did, its part in the extremely difficult negotiations that led us to an agreement on a 15% flat tariff. This is being called into question today, but it looks like — from the statements President Trump is making — that could lead us to a tariff level more or less the same as the previous one.At the time I also used some arguments with the American side. I consider the tariffs between Europe and the US a mistake. I think we should go in a diametrically opposite direction — we should move toward a free-trade area, and therefore it’s a decision I do not agree with. Clearly, we’ve tried to ease the situation as much as possible, in short, to seek an agreement that is sustainable and reasonable.This is more or less what the figures here are saying. I’ll say it again: I’m not surprised about Italy as there are some factors that need to be taken into consideration.Think about the whole agri-food issue. Those who buy an Italian product, buy an Italian product because they want to buy an Italian product. These are not market shares that can be recovered with domestic products, first of all.Secondly, I happened to point out to my American counterpart that when we sell a bottle of extra virgin olive oil on the American market, we sell it for about €5. In an American supermarket, you can find it for about $22. So who has the highest revenue? Who will pay the highest price? So I don’t think it was a functional decision; I don’t consider it a functional decision. Clearly, everyone has their own policy, and we tried to find an agreement that was sustainable and reasonable. I think that today, if the opportunity cannot be – but I believe we should try to do it – to use what happened to try to move in a diametrically opposite direction, but it clearly takes two to do that. I think that, from what I understand, including from the work we’re doing with the European Commission, with European interlocutors, I think we’ll try to more or less confirm an agreement that, in the end, we all shared together.Italy, certainly at the time but also now and whenever it can, plays its part to help, and it certainly did so on the agreement on tariffs.Bloomberg: The chapter on complex friendships continues: Viktor Orbán. This week marks four years that unfortunately, Ukraine is suffering from a Russian invasion that continues unabated, and you, precisely by intervening through your personal relationship, managed to ensure that the EU was able to unlock a €90 billion loan in December with the European Council, which was indeed dramatic and complex. We’re already seeing how things have changed to ensure that this commitment comes to fruition, with an about-face, unfortunately, from Orbán.Do you believe that the European Union must move beyond the unanimous decision making mechanism to become more agile, more incisive, or even, as my colleague Donato Mancini said, secure its future?GM: I agree that Europe needs to secure its future, but I disagree about moving past unanimity. I don’t think that’s the solution, especially not on foreign policy, which is one of the fundamental elements of national sovereignty.I think Europe can more easily overcome its slowness by dealing with fewer things, and doing them much better. I continue to believe in the only principle of the European Union that hasn’t really been built, which is the principle of subsidiarity. Let Brussels leave to Rome what Rome can do better. What Rome cannot do alone, that’s where it needs Brussels. So I think the European Union should, let’s say, definitely address those issues. The Ukraine issue is one of those issues, of course, that nation states can’t do alone, rather than claiming to solve every problem, because it’s much more difficult to find solutions for the issues where they are necessary. Then, on the Ukraine issue, for example, we’ve always found solutions. We’ve always found them, we’ve even always found them despite some people disagreeing. And, just to be clear, when we decided not to use frozen assets, but to use the loan we’re talking about, all 27 of us did so with all the respective diversifications. So solutions are found. For everything else, there’s enhanced cooperation, which is a topic that is being talked about again today, something I’ve been talking about for some time. I think, however, that in general, especially on major issues, shared solutions are much more difficult, but they are more effective.Because when a shared solution is found, everyone is committed to working towards that solution. And I believe this should be, let’s say, Europe’s challenge.I don’t think the solution is simply “let’s move past the unanimous vote.” I don’t think it would be that helpful, moreover, given a European dynamic that is very complex and also involves, let’s face it, a very, very, very invasive bureaucracy. Very invasive even with respect to political choices, because I see decisions being made and then they’re slowed down by a bureaucracy that sometimes seems to have its own agenda.Bloomberg: But we talked about tariffs a little while ago. Do you agree that tariffs should remain the responsibility of the European Union?GM: Yes, yes, well, common policy. I agree that a lot of issues should remain the responsibility of the European Union. I don’t agree that the European Union should waste time dealing with a lot of matters that the European Union doesn’t need to deal with because, in the end, it is not able – it risks not being able to do anything well.Bloomberg: Last, chapter on the complex friendship front: Macron. How are relations going? We’ve seen that a summit scheduled for a few weeks has been delayed. There was exchange on social media. How are relations with France going?GM: Very often I see foreign policy described in a childish way. Particularly with some, regarding the relationship with some leaders. Italy and France are two great European nations that share a lot, that work together on many issues, and that disagree on some things. That’s basically what happens with all European countries and major European countries. With France, we’re actually working on an intergovernmental summit, so, let’s say, there’s no intention to reduce our relations and cooperation, but to increase them. The date was postponed at my request, because there was a scheduling conflict for a logistical issue. I asked Emmanuel if we could change the date. Then, clearly, everything is scheduled, the G7, so… but we’ll have the intergovernmental summit before the summer. On the statements: these are things that happen between leaders every day. I wouldn’t exaggerate, because we continue to work together on many things. Then there are also things we disagree on, but this applies to Macron and to everyone else.Bloomberg: We were talking before about the fact that you have, let’s say, a new record, in addition to the spread, which is having made a seemingly ungovernable Italy governable. There are, however, a series of elections, including one in a month, a referendum. You said it’s not a referendum on the government, yet a no victory would still be a signal. What would happen or how would you experience losing this referendum on justice?NOTE: A vote for ‘Yes’ is for the separation of the career paths of judges and prosecutors. Those campaigning for ‘No’ argue that it dilutes judiciary independence. The referendum is taking place on March 22 and 23 in Italy.GM: Look, I think that a possible win for the ‘no’. Because this is a nation that needs to be modernized, and what we’re trying to do is modernize it. What we did with the justice reform was nothing more than fulfilling a commitment we made in the electoral program voted for by the majority of citizens, and we’ve done our part of the work. I believe the justice referendum should be approached by looking at what the reform entails, whether justice improves or not with this reform. The apocalyptic tones used by some in this country are ridiculous, ridiculous, and unfortunately betray an attempt to exploit political conflict to ensure nothing changes in Italy.So what does the reform do? For example, it introduces the separation of careers between the judiciary and the prosecutorial professions. Are you aware that in at least 22 out of 27 European countries, the careers of the prosecutorial and judicial professions are separate? And how is it possible that here it becomes an instrument of an illiberal government, something that exists in virtually all major Western democracies? I think, in this case, I’m the one who would like to bring Italy more in step with Europe. It’s a law, a reform of absolute common sense that does three very simple things. Separation of careers, what does that mean? It clearly means strengthening the impartiality of the judge, therefore it means creating a fairer process. On the draw to select the Superior Council of the Judiciary: this is very funny, because I hear people say that with this reform we want political control over the justice system, but no one explains to me why or how. We are doing exactly the opposite. That is, today a part of the Council is elected by Parliament. What does that mean? Is there political control or not? It’s a political decision. We are taking away Parliament’s power to appoint the Council. So the question we must ask ourselves in this country is: when someone needs to lie to support their arguments, why are they doing it? Perhaps because on the merits they are not very convinced of their arguments? The third thing this reform does is the High Disciplinary Court. That is, magistrates, as happens everywhere for everyone, tomorrow, if they make mistakes, will be judged by a third-party body. This too is an element that strengthens the quality of justice in Italy. It doesn’t do anything else, these are the three things this reform does for which we are accused of wanting to control judges, of wanting — we want to free judges. We want to free meritocracy for the judges. We want to free judges from the game of factions, from having to necessarily respond to a factional mechanism in order to pursue a career regardless of their value.I want a justice system in which, when a judge is worthy, he doesn’t need to ask permission from the factions to advance his career. So, in my opinion, it’s a great opportunity, because either in Italy we say that everything is fine with the justice system, but I’ve never heard anyone say that, not even any of those who are supporting the no vote today. Or I think it can be modernised and it can be improved. These are three very simple changes which, however, in my view can absolutely make the difference in terms of the merit, effectiveness, efficiency and seriousness of Italy’s justice system. Because it would be a shame if, let’s say, the yes vote didn’t win, but I believe it will, because it would be a huge missed opportunity.Bloomberg: You mentioned artificial intelligence. Could artificial intelligence really be the thing that will end Italy’s famous bureaucracy, and does it fall into one of the three key words or concepts you see for Italy’s future?GM: Well, it’s inevitable — let’s say — that artificial intelligence is one of the key concepts of the future, not for Italy, but for the entire world. I see great opportunities and enormous risks. I see enormous risks because politics is moving too slowly and artificial intelligence is advancing very quickly.I fear that we are not understanding many of the processes that are being generated, and I fear we might understand them too late. It’s the subject of several in-depth studies I’m doing. So the real question is how can we best exploit the potential, opportunities, simplifications, and efficiencies that artificial intelligence can offer us without risking, first and foremost, an unmanageable verticalization of wealth, without risking millions of people being squeezed out of the labor market. And be careful about this, we brought it up as a focus of the G7: we’re clearly accustomed to progress in which machines replace human labor. What’s the big difference? That this replacement has always occurred in physical labor, and this helped humanity elevate itself. Today, we no longer talk about replacing manual labor. Today, we talk about replacing intellectual labor, meaning those most at risk are, let’s say, high-skilled workers, that is, professionals. So the risk of a verticalization of wealth and a multiplication of unemployment is a risk that, for example, I believe is real if artificial intelligence isn’t managed properly.This is why we have — because we’re living in a very particular time in which we’ve become accustomed to an increase in labor productivity corresponding to an increase in employment. Today, that’s no longer the case. Today, you can have an increase in productivity without even remotely having an increase in employment. That’s why we launched the “ the more you hire, the less you pay” initiative, right? That is, a taxation that takes into account your number of employees. There are processes that need to be monitored, controlled, governed. Clearly, nations can’t do it alone. This is one of those things that would require global governance. I think we’re quite behind, but the big question is this. So yes, on the one hand, Italy is also investing, as you know, in artificial intelligence startups, but on the other hand, are we making the same mistake we did with unregulated globalization? To believe that the invisible hand would solve all problems, that all systems would be democratized, that everyone would become richer. That’s not how it went.What happened was that wealth became verticalized, what happened was that we lost control of our supply chains, what happened was democracies weakened and non-democratic systems strengthened. It worked more or less like this.Bloomberg: This could perhaps be a front, more than a question, an open consideration on which your relationship with President Trump could be played out again, given that it’s such a global issue.GM: Certainly one of the major issues that need to be addressed, that need to be addressed with our partners, particularly our European partners and also our American partners. Absolutely yes.Bloomberg: But would you be in favor of a tax on the profits of artificial intelligence companies to create a cushion for employment change, for example?GM: Well, look, I’ve never reflected about this, we’ve never talked about it, so I can’t give you an answer, but I wouldn’t start with the issue of profit, I’d start with the issue of involvement. When we chaired the G7 we involved these companies. The issue is so complex that it’s fundamental to have a frank conversation.Postmedia is committed to maintaining a lively but civil forum for discussion. 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