Rise of Asia positive, not a threat: Prodi
The  Nation, 11 April 2013



http://www.nationmultimedia.com/business/Rise-of-Asia-positive-not-a-threat-Prodi-30203831.html

At 73, Romano Prodi, former Italian prime minister and ex-president of the European Commission, is as enthusiastic as ever about his new role as a United Nations special envoy to the Sahel in Africa. He was recently in Bangkok as a speaker at the International Peace Foundation. In these interview excerpts from an interview with him, he shares his views on the crisis in Cyprus, the European Union and political and economic conditions in Italy.

How severe is the financial crisis in Cyprus?

The situation is serious, but the dimension of Cyprus is very low. Cyprus has always been some sort of a fiscal haven. Cyprus is a safe haven for a lot of Russian savings, so it's a peculiar case.

One measure that was talked about in the beginning is to tax deposits, but it doesn't sound very fair to the average consumer ...

I think this was done because it was not damaging Europeans, but foreign investors, to be very blunt. As to whether this is dangerous in that it will bring contagion to Europe, I don't think so.

Would it be possible for Cyprus to be forced out of the euro zone?

No, because things can be fixed. If you want to get out of the euro zone, you can, in theory, but you have to be careful. The idea of getting in and out could be dangerous for the future of the currency. A currency is forever, not just for the moment.

Until last summer, it was possible, but then the European Central Bank decided: look, in case of need, we will take responsibility, like supplying liquidity that is necessary. Since that moment, we will need time, but the euro will survive.

When you judge Europe, you cannot judge on the short term, because we've done something nobody has ever done. Europe was a tragedy for a couple of millennia, always in war. Now we have peace and prosperity. To build a new reality, a Europe in peace without armies is difficult.

You need time and continuous bargaining.

What is the foundation of a nation? You need a currency and an army. We changed the currency and changed the nature of our nations. They are not the same as they were in the past. The adaptation, the uneasiness of people, is absolutely understandable, but despite that, nobody wants to go back. We are still No 1 in the world in gross domestic product, No 1 in the world in production, and still No 1 in exports.

How would you rate the success of the European Union, nearly 60 years after the Treaty of Rome?

We have done a lot, 27 countries, when you think we have a parliament that speaks 22 different languages. We enlarged when the Iron Curtain fell and Europe was able to heal a lot of political wounds.

In recent years, globalisation has brought out a lot of fear. Europe is in a period of fear: over competition, over Chinese competition, over immigration. People are afraid they will lose their primacy. My judgement is that now is not the best moment for Europe, but I understand you must look at the long range. Europeans are much better off than anybody else in the world. Each country is different, but if you take the average, we are protected. We go to hospital without having to pay. Pensions have decreased, but we still have pensions.

This is the reality.

Do you think the European Union really deserved the Nobel Peace Prize last year?

Yes, especially the Peace Prize, because it's already three generations during which we haven't had any conflicts, and we are in a complex situation, too. We have minorities everywhere; we have a diverse population mix.

The best memory of my presidency of the European Commission was when I was at the Romanian parliament to explain about Europe. A man, a member of parliament, stood up and defined himself as a member of the [country's Hungarian minority]. Think of the complexity.

For a definition of Europe, he said his father had been killed because he was a member of a minority, and his grandfather had gone into exile for a long time because he was from a minority. He said he wanted to turn to Europe because Europe is a union of minorities.

This is the new world. And, at least until now, it has worked.

Do you see the growth of Asia as a threat to Europe?

Many think that, but I say look, this is the way the world changes. We must accept it. When 2, 3 billion people wake up, it's a good thing. It's not a bad thing. But we have to change ourselves, and I think we are able to do it.

A divided Europe might not be able to do it, but together, we are 500 million people. Not like China or India, but not so bad. We can be among the leaders in the world.

What is the economic situation right now in Italy?

We have very low internal demand, but very efficient export performance. Italy has no raw materials, no oil. We have an external trade balance that is not bad. Exports have started increasing substantially, so it's not a problem of production, but a problem of demand.

Ex-prime minister Mario Monti helped Italy out of its economic crisis, but he got only 10 per cent of the vote, whereas ex-PM Silvio Berlusconi got almost 30 per cent. What does this mean?

I think Monti did a fantastic job. He arrived at a period in which expenditure was exceeding any possibilities, and he put things in order. But during [last] summer, the economy started to collapse. This is why people didn't vote for him ...

The case of Berlusconi is different. He's a salesman. He told people: Not only will I decrease taxation, but I will give you back the taxes that you paid last year, in cash!

In a situation where many people are under stress and there is the idea of having 1,000 euros in their pockets in one month, they are tempted to do it.

Berlusconi did not do badly [compared with Monti], but he lost 6 million votes compared with past elections. He did better than expected, but very, very bad.

What would be the most important job for the new Italian government?

Recovery and growth. It's a strange situation. Italy has a large outstanding debt, but the budget is almost perfect. We have a deficit that is a little more than 2 per cent. The US has [a deficit of] 9 per cent and the average in Europe is 4 per cent.

But at this moment, the problem is unemployment and growth. When you don't grow, the situation gets worse.