Italy's new prime minister Enrico Letta has called on European leaders to devote as much time and energy to growth measures in the future as they have to crisis-era austerity measures in the past.
As he spoke, members of the Cypriot parliament voted by 29 votes to 27 to accept the terms of the country's €23 billion bailout. The president, Nikos Anastasiades, had urged them to act in the national interest. "What we're called upon today to do is to adopt a loan agreement that will allow our country to breathe and give us the chance to overcome whichever problems we will face in this crisis," he said.
Finance minister Haris Georgiades warned against seeking "non-existent alternative choices and
deus ex machina
and decide to take our fate into our hands. Instead of complaining, we should recognise our own mistakes and start working to recover lost ground".
Adjustment programme
The deal involves a punitive adjustment programme involving 7.1 per cent of GDP, the winding down of the second largest Cypriot bank and a levy of up to 60 per cent on deposits over €100,000.
Cyprus is required to raise €13 billion from its own internal resources while the European Stability Mechanism would provide a €10 billion loan.
Outside the parliament protesters railed against the deal which many see as foisted upon them by Germany.
In Berlin itself, a day after claiming Italy was "dying from austerity alone", Mr Letta warned that reaching a synthesis between reform and growth measures was crucial for ensuring the continued cohesion of the European project and its people.
'Critical mass'
"As European people it is only as Europe that we are able to challenge a globalised world and either we build a critical mass or we will not survive," he said. "We don't want to be a Europe that just runs up debts . . . [but] we want a Europe that is also determined to act for growth."
Germany's chancellor Angela Merkel appeared nonplussed by the Italian visitor's call, insisting that "solid [public] finances and growth are not contradictory".
“Growth allows solid finances, solid financing creates the prerequisites for growth,” she said.
“But it is important that we don’t see growth as something where we spend public money,” she said, “but where companies feel able to invest and create jobs. That’s why we need structural reforms and less bureaucracy”.
Mr Letta promised to honour all reform commitments of the previous Monti government and, without going into details, vowed to fill the funding gap left by rolling back a property tax. This was a campaign promise – and condition for joining the new coalition – of Silvio Berlusconi and his political allies.
