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A Conversation with Romano Prodi [Rush Transcript; Federal News Service]

Speaker: Romano Prodi, Prime Minister, Italy
Presider: Richard N. Gardner, Senior Counsel, Morgan, Lewis & Bockius LLP; U.S. Ambassador to Italy, 1977-81
September 20, 2006
Council on Foreign Relations New York, NY

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RICHARD N. GARDNER: May I have your attention, please? Welcome to this very early morning on-the-record conversation with Prime Minister Romano Prodi of Italy.

Please turn off your cell phones and other similar devices. We have a tight schedule. The prime minister has to depart at 8:45 a.m.

PRIME MINISTER ROMANO PRODI: I don’t know—

GARDNER: (Laughs.) They tell me.

PRODI: I am a package. (Laughter.)

GARDNER: (Laughs.) He’s had a busy time. He met with President Bush yesterday, and today, he’s speaking at the General Assembly and doing many things, and then flying off tonight to Rome. And of course, he comes here from China. We’ll talk about that perhaps in a moment.

Let me begin with an episode that I think might be interesting for some of you. In the spring of 1979, when I was ambassador to Italy, I found that there was a brilliant young economist, 39 years old—that was young for me—as minister of Industry in the Andreotti government, and I invited him to lunch. The morning of our luncheon, it was announced on radio that Andreotti had reshuffled his government, and this brilliant young man was out of a job.

PRODI: Don’t do—don’t do it.

GARDNER: (Laughs, laughter.) That won’t happen—that won’t happen again.

PRODI: (Inaudible.) (Laughter.)

GARDNER: So he called me and said, “Did you hear the news?” I said, “Yes, I did.” He said, “You know, I’m not anymore a minister.” I said, “I know.” He said, “Well, you don’t want to see me for lunch then because you’re ambassador. Why—I’m nobody.” I said, “Romano, come on. I’ll make a prediction. I know you’re depressed at the moment, but one day you will be prime minister of Italy.” And he said, “No, no, no. Impossible.” I said, “You will be prime minister of Italy. I promise you.” Well, when he became prime minister—

PRODI: Well, my answer was—(inaudible).

GARDNER: (Laughs.) It was a threat to you. Well, in 1996, of course, he became prime minister, and I think historians give him credit in those two years that he had as prime minister in 1996,1998, laying the economic foundations through courageous policy of Italy’s qualification to enter the Euro zone. He went on, as you know, to be president of the European Commission, where he presided over the successful introduction of the euro, the enlargement of the European Union.

Now, he comes back for the second time as prime minister, and one of the things he does early in this new assignment is something very courageous. He offers 2,500 Italian troops for Lebanon, and Shimon Peres put it very well when he said, “Without Italy’s initiative, at a time when other countries, such as France, were backing away, without Italy’s initiative, Resolution 1701, which help put an end to the fighting in Lebanon, would have remained a piece of paper.”

So Romano, you have many friends in this room who honor you, and we’re very pleased that you’re taking time out of your busy schedule to be with us.

Now, having softened you up, I’m going to ask you a couple of hard questions—maybe not as hard as Charlie Rose did last night, but different.

The first has to do with the prospects of your government. Here you are, you won the closest election in Italian history. I think the margin was one-tenth of 1 percent of the votes. You have a two-vote majority in the Italian Senate. You have nine political parties in your government, two of them communist parties.

Your opponent, Mr. Berlusconi, announces that he’s going to bring your government down as soon as he can. And yet, you have an ambitious agenda which you’ve set, including making Italy more competitive, reducing the excessive budget deficit, restoring competitiveness in service industries, and you’re going to—you have a five-year term which you say you’re going to be able to fulfill despite this fragile situation. Italy is a country of miracles, but how can you do this? (Laughter.)

PRODI: Well, I divide the answer in two parts.

First, in all the democracies, you win for very few votes. You know, if I am not wrong, I am in United States here, you know, and so—(laughter)—please don’t speak about slim majority. (Laughter.)

And—but what is bad is that with the previous law—and Berlusconi was in the government with this very small majority, but for five entire years with a big majority in the lower and higher chamber in the senate—with the previous law, I should have a comfortable majority. He changed the law a few months before the elections just to avoid a defeat, because the forecasts were more in my favor than the results, to be honest. But anyway, it so happens the last weeks of the campaign, they were (shelling ?) on tax cuts and miracles and so on and so—and so I am unable to make miracles, you know, so it’s—this is my limit, you know.

Romano Prodi and Richard Gardner discussing Italy’s foreign policy, including relations with China, the Middle East, and Europe.

But the second part of the answer is very clear. I’ve been four months in the government, and even this morning, now, we have a slim majority, but we have a majority, even if three of my senators are here. In the U.N., we got four votes’ majority in the senate this morning. And we have a strong discipline.

But to pass from the parliament situation to the real political situation, my conviction is clear. If I go on with the reforms, I go on for five years. If I step down or if it slows down, I (thought ?) this was when we decided that liberalization of a few sectors of Italian economy—in the service sector, it was—

GARDNER: The pharmacies, taxis, accountants—

PRODI: Pharmacies, the taxis, notaries—

GARDNER: Notaries.

PRODI:—lawyers—it went well. It went well because everybody knows that we need reforms. The Italian program is reform, reform, reforms. And the previous government, they had a fantastic majority, and they didn’t change anything. Well, they changed only, you know, laws in favor of the prime minister or his friends, you know. And if I show to—run the country in favor of a majority of people, I can go on five years.

So it really is not easy, because we have nine parties, and we have—you are always a half prime minister and half a social worker. (Laughter.) But if you read Chris Patten—Chris Patten wrote a book about the European Commission. He said, look, the same style of government they had in Brussels. The commissioners, they were very visible, with a strong autonomy. And so after a couple of years, they cooperate together with the government. This is, of course, the style of government you need when you have this slim majority, but you can do a lot of things.

GARDNER: You’re famous as a bicycle rider. It’s like riding a bicycle?

PRODI: Yeah.

GARDNER: If you slow down, you fall off.

PRODI: It’s really—

GARDNER: So you have to pedal very hard—

PRODI: Pedal very—well, good—you are—

GARDNER:—in the right direction.

PRODI: We have not—in the right—(and always/in all ways—and always/in all ways ?).

GARDNER: Okay.

Foreign policy. During the campaign, you said something which struck me as very interesting. I quote—this is in relation to the United States—“To a friend, one must say what one thinks. When there is agreement and when there is not, the United States is served by this kind of ally and not the other type.”

Silvio Berlusconi gave support to President Bush across the board. He was even quoted once as saying, “I will support President Bush’s policies even before I know what they are.” (Laughter.) May—that may be apocryphal. I don’t know, but—

PRODI: No, no. No.

GARDNER: He said that. Yeah. Okay. (Laughter.)

Your approach is—you’re known as a great friend of the United States, but you’ve said, “I’m going to tell the United States when it’s right and when I think it’s wrong.”

You met with President Bush yesterday. How has the administration reacted to this new approach in Italian foreign policy which puts more emphasis on Europe and on the Middle East and the Mediterranean? How have you—has this made your relation more difficult, or do you—are you happy with the way it’s begun?

PRODI: Declaration: You know, when I met Bush in St. Petersburg, he told, very clearly, in front of everybody, “I understand that you leave from Iraq. I shouldn’t be surprised at this. We are not, because you gain the election on this platform. I know you are clear, loyal, coherent, and so let us go on with our cooperation.”

On the facts, I—five years president of the European Commission—never so good relation with the United States. Galileo, anti-terrorism, I can list—anti-dumping agreement—I can list hundreds of agreements with the United States. Not Iraq. Not Iraq, because, you know, I don’t—so I am not an expert on the Middle East, but I know very well the (tense ?) of the situation, the change, the change, you know. If you don’t (recognize?) the countries—if you go to Tunisia now, you see women with (this confidence that ?) they never had, you know, and everywhere you feel the situation when you live there.

And so I was opposed to the Iraqi war. That’s all. And I think that peace in the secure—this is the same thing I told in China, you know, so—but this approach with China makes something against the U.S.? No, Europe and U.S.—and U.S.—must go together. Otherwise, all the balance in the world will be devastated.

But—but—(chuckles)—I think that mistakes are mistakes. And terrorism has not—you know, the situation of terrorists (is not certainly?) better off now than before the war in Iraq. The emergence and the role of Iran is because there is a change in the power situation there. And I can list a lot of countries where they take this as a negative not only for Europe but for the United States. And this has been my position, and I never changed it.

And you know, now I am a little more confident in the sense that in the Lebanon, in the Lebanon, it was, thank God, an agreement between U.S., Israel and Jordan, all European countries, you know. And it is the first time since very many years that we have this change and common action.

And so I think I have got more with my position clear and coherent for the friendship between the U.S. and Europe than many others who have told, “I shall follow the American administration before they speak,” you know. I thought—I think that we should—this has been—oh, look, there’s been a difficult—a difficult situation, because for years I was (shelled?) of anti-American, anti-American, anti-American. You—luckily, my—you know, I was teaching here, studied here, working here, you know. I know hundreds and hundreds of people that have a responsibility. And so there could not be any misunderstanding, but then they told, “Yes, but the communists will”—and they are not prevailing in my foreign policy.

Of course, now we are starting, because having in Lebanon all of the great powers—you know, U.S., they have no troops, but they are active there. You have China. Russia will send not a big number of soldiers, but Putin told me that they were thinking to, you know, be there in some way. You have now a new situation so that you could start also thinking to the Israeli and Palestinian situation and with a new dialogue and multilateral—(inaudible word)—that is what is important in this area. This is what (they’re?) thinking.

GARDNER: Some Americans still worry that a stronger, more united European Union will be a counterweight to the U.S. rather than a partner. You don’t see a contradiction between the—

PRODI: You have never been in China? (Laughter.)

GARDNER: I have been in China.

PRODI: You know, when they say counterweight, people have no idea—(inaudible)—almost is now. You know, I think that Europe, if we have common sense, we stick together, you know, not counterweight. You need help, we need help, you know, not because we want to counteract China, because I am working China (camps ?) in the world community with a peaceful attitude, and the fact that they are in Lebanon is so important, you know, is so important. But in this world to think that we can be a counterpart of the United States and that that it is our interest to do that is completely out of any historical perspective. You can do it, but it’s a mistake. And then if you take also within economic terms, cultural terms, but if you think the military—(inaudible)—that you find that is complete nonsense.

GARDNER: The initiative you courageously took in sending those troops to Lebanon is deeply appreciated, but it involves risk putting those men between Hezbollah and Israel. Exactly why did you do that? It was not an easy decision, surely. And some people say that the mandate and the engagement rules are ambiguous, and it’s been criticized even within Italy. Why did you do it? Why did you take this decision?

PRODI: It was an easy decision inside the government, you know. With the minister of Foreign Affairs, with the minister of Defense, it was an obvious, obvious (unitive?) reaction. We live in the Mediterranean. From here, you may see it like spectators, you know. But I was telling yesterday to (Charlie Rose ?) show that last week there was a meeting in Sirte, Libya, of the African Union. I started at 6:00 from Rome, I had dinner in Libya and then I went to sleep—(inaudible word). We live there. (Inaudible.) And the Mediterranean is a time bomb. A time bomb. And you have to care about it.

So I not only decided this mission, but I have already made a tour of my European colleagues who live in the Mediterranean area to try to have a new policy. When I was in the European Commission, I proposed three times to have a Mediterranean Bank of Development, and the northern countries didn’t want. It’s completely justified, you know, because they are not Mediterranean countries. Then I talk—(inaudible)—universities and so on, now with France, Spain, Greece, Cyprus, Malta, and Germany and Austria, which are not Mediterranean but they are very interested and forward looking on these problems, we shall try to have a Mediterranean policy, (active ?) Mediterranean bank in which will be (a board?) of equal members from south and north—(inaudible word)—university with the same number of students south and north, professors south and north. If we don’t do that, you know, (it will be?) a collapse. But we are in the middle of a—(inaudible)—I don’t know how is—

MR. : Fault line.

PRODI:—fault line. We are the fault line. So I have to take care about this policy. And I wonder that my predecessor they didn’t look at the situation, you know.

GARDNER: You used the term “fault line,” “time bomb.” The pope made a statement recently that has caused tremendous outcry in the Islamic world. There’s also been widespread criticism in the Islamic world for President Bush’s reference to “Islamo-fascism.”

Do you want to comment on the whole question of how we address the Islamic world and how we might change our rhetoric or—

PRODI: Well, if you know the Islamic world, you understand that there are one hundred or more Islamic worlds. And my strategy is—my—let’s say my starting point is that the moderates and people who want to live peacefully have the vast majority. My policy is to work on them, and dialogue and dialogue and dialogue and dialogue. And, you know, in Lebanon till now, of course, I know the risk of our troops, you may have all the incidents, but when they arrived, everybody was happy, was—you know, that’s because it was a clear message to the most part of the Lebanese people. But if you don’t act, giving action, you will never increase the strength of the moderates and people who want to cooperate.

This is why I am so—you know, my obsession is Gaza. When you are there and you see the third generation born in the camp, and you see—Israel will have to solve this problem, you know, because this is a school of non-moderates, of extremists, you know. The same thing is the (tension ?) when you—the war in Iraq, you multiple people who are not moderate.

And so all my political life, let’s say, look, if there’s a clash, we die, we die because we use—you know, everybody will use instruments that are for destruction without any limit, you know? September 11 was an example. But you can multiple that. If you have this policy of working and linking together, you may have solutions. And this instability over European—over Mediterranean—I mean I was born in this situation, I was born in the middle of it, you know. This is what I think that the Americans should exploit more, this loyal, loyal differentiation or specialization or—because it’s our job, it’s our life.

GARDNER: With the victory of Hamas in the Palestinian elections, the United States and Europe cut off assistance to the Palestinian Authority. If they put together a unity government now which includes Hamas, under what conditions should Europe and the U.S. restore funding to the Palestinians?

PRODI: First of all, one principle that guide my life, when a revolution is done, it’s done, and when an election is won, it’s won. I’m very simple, you know, but, you know. With Iran it was—(inaudible)—I found myself in Iran just before the revolution. And, you know, everybody understood that we were close to a revolution, you know. And when the revolution came, it was not accepted. And it’s a clear case that you need a dialogue when you have a revolution, always, because a revolution means extremists. And if you don’t accept the change, you never had a dialogue. And this was the history between Iran and U.S., you know, with horrible mistakes from both sides.

But the starting point is, when there is election, you have to accept the results of the elections—in Algeria, in Palestine. And this is the role, you know. And I found contradictory to push for elections, and they say, “Oh, the result is not what I wanted, so I shall not accept.” Because Hamas has won in Palestine. From the strange ambiguity of Hamas, they are from one side terrorists; from the other side, they run the hospitals, they are close to the society. They are always a very complex group of people, and so you have to divide this, otherwise you will never have the results.

GARDNER: So I understand, you would recommend to President Bush that we, the United States, and you in Europe talk directly to Hamas, to Hezbollah and to Iran.

PRODI: Yeah, and the coalition government is a good occasion to do that, if it will go on, because, you know, they have—when you see tension among Palestinians, five killed, and so on, the situation is complex even among the Palestinians, you know. It’s not—I am describing too easily it, you know. But you have to work in this direction.

Look, which is the alternative? We go on another century in this situation. With—now, with a new prospect, supply and demand of oil, that are the limit, you know. So the marginal supplier is now Iran, and with everything to make them much, much, much powerful than before. This is a policy?

GARDNER: Before we open it up to the audience, one more question. On China, you—if I’m not mistaken, you were in China five days, five different cities, four ministers you brought with you, and am I correct, 800 businessmen?

PRODI: Yeah. Correct.

GARDNER: Eight hundred.

PRODI: Yeah. Not big businessmen because it is a culture of middle—

GARDNER: Yeah, small, middle scale enterprises.

PRODI: But they were—you know, each one a few hundred million euro.

GARDNER: Why—why—why this visit? What was the purpose? What did you achieve?

PRODI: You know, because look, if you like or not China, it’s China, the new protagonist of the world—1.3 billion people. Two figures growth year by year for already 14 years. And then they will go—Oh, I know China since a long time. I know all the leaders and I follow step by step the change that are much deeper than anybody thinks. This society is changing. These two years—in the last two years in China you talk about the social situation, about disparities, about the collapse of the health system. You couldn’t do that before. You couldn’t do it. You talk about human rights, capital penalty—

GARDNER: You talked to them about human rights?

PRODI: Sure, we have talked with them about human rights, of course. And the Chinese, they say, “Look, we are 1.3 billion people with a terrible heritage.” And you know, this was not possible—I follow China since 20 years, almost (yearly?). Only—well, I don’t know them currently, but only official I can give you, which is the prime minister, president of the Republic and the main minister of behavior. And the country’s absolutely new. You know, you visit the campus of 30,000 students with each student his knowledge in the colleges, professors in the college. And this is two, three years.

And so this should be the Asia century. We are talking about China because I came from China. With a different characteristic we could do the same analogy with India. In February, I go to India.

And the second reason I went to China is because my government has broken all the good contacts with China and simply enhancing their trade problems. But it’s difficult, I know, discussing about—(inaudible)—about trademarks, about the (payments ?) and all that. But if you only complain about trade, you simply have negative aspects of import and you have not the positive aspects.

But I found China asking for dialogue with Europe in an unbelievable way. They do understand that in some way, not because of the market only, but because of the slowly opening up of the society, must have a dialogue with Europe. And they asked me also, knowing my past and because I went there a few times as president of the European Commission, to go on working on helping (pro-Italy?). And for my country it’s a clear policy, Italy is the gate of Asia.

We are in the middle of the Mediterranean, and the five—5.5 days of navigation from our port to Rotterdam. And so I told the Chinese, look, we had—I’m joking but not joking, you know, there were European concessions in China, why not Chinese concessions in Europe—(laughs, laughter)—to show the message of deep cooperation? But, please, let us try to have a strategic mind, you know, hear our businessman.

You are the first place, the biggest investment flow in world history, because here we always talk of fact that it never happened in history. Europe, U.S., to China or India. Well, this will go on half for exports, half for internal market. The internal market part will increase because consumption now is moving, you know. Remember the Japanese strategy one and a half generations ago. It’s clear.

Second strategy underestimated, understudied, underanalyzed inside U.S., Chinese investment in Africa and Latin America for oil, mainly for oil. I met in Tiananmen Square the Sudanese prime minister—(inaudible)—you know, going up and down, raw materials, and Latin American foodstuffs, soya, and corn, you know, and—it’s a second wave independence.

Third wave is clear. Investment into U.S. and Europe through a company the big exporters, normal, you know, like U.S. did, you know; adapt production for the market, make specific research on what you need in this case when the flow is so big. I want to participate in the third wave. This is my clear, simple strategy, you know. Why? Because the disaster of Italy—because of a slow, I would say (strength?) of the government—because of the difficulties of the country. You know, I always repeated that Italy was the only country with a Berlin Wall inside the country dividing one country and not two countries, you know. This is—you have to be objective in your analysis, you know. The Curtain Wall was—the Iron Wall—Curtain was there, you know. But because of this reason and the internal struggle, we lost the American investment wave. They went on north Europe. We lost the intra-European investment. They went to Spain, to the new countries of the enlargement. But the enlargement was an historical necessity. I wanted it, I did it, I pushed it because it was an historic—I don’t want to lose the third wave, historical wave of investment: the Asian investment into U.S., Europe, and so on.

GARDNER: That’s very eloquent and very interesting.

Now let’s open it up for questions. Here, gentlemen. Yes. Wait for the microphone and then kindly state your name and identification and who you are. Yes.

QUESTIONER: I’m David Braunschvig, Bear Stearns and Council on Foreign Relations. You just said that you would welcome foreign investment in Italy. Last Friday, the German CEO of the Italian Telecom Company resigned on allegations that your administration had meddled excessively in their plan to sell the last remaining mobile telecom unit to—that’s controlled by Italians to potentially foreign interests. An hour after his resignation, Neelie Kroes, the competition commissioner of the European Commission, was here at the council, and she indicated how effective her action had been in other instances where there’s excessive meddling, such as in Spain with the energy transactions. When asked about Italy, she said that she would look into it. How do you view these allegations of something that would apparently go against your desire to reform Italy and to open it to the world?

PRODI: Well, first of all, Italy is certainly open to the foreign investment, even the utilities. You talked we had four telephone companies; three have already been bought by foreign companies.

So I don’t think that we are an example of self-sufficient. Thirty percent of Italian energy market is owned by French and Spanish. And the banking system—two banks were bought by foreign banks. And I can go on. The distribution supermarket, the hypermarket, are French and German, mainly. So I can go on listing that.

But let us go to telecom because it’s quite interesting, you know. I was called by Mr. Tronchetti Provera for an urgent meeting. I did it, you know, and he was—as I think is not interfering because he asked for it. He told also to the press about the meeting is not a details—is an important detail. And we went to the meeting and he told me about negotiation—now it’s public—with Murdoch. He said the negotiation go well, and we shall go on in exchanging some, let’s say news—content of the news with—so.

Well, the day after, he publicized a plan of the split of the mobile, of the fixed-line unit, and a total strategy, and he didn’t tell me one word about it. And simply he hinted that the government knew because of the meeting, clear like that. I simply told that I was surprised, and I used a very—I self-constrained, you know, because if you ask a meeting with the prime minister and you have a big plan already prepared and you don’t tell anything to him, it’s not a problem of interference, it’s a serious problem of behavior. And this is what happened.

And I’ve never criticized this plan, which was being examined. Of course it was actually making a big mess. And I had to answer to the Parliament coming back about this; they said what happened, you know? And it will be certainly clear in any details in the future. And then I asked (them\him ?) a question, you know, you think really the prime minister has not the right—no, “right” is not the correct word—but is not a good, polite habit to talk to him about a decision that will concern the most important company of the country, and that has influence on education, information, everything? I think it’s correct to tell him. And there was no, no, no, no, no decision interference message from the government on this subject.

GARDNER: So, if Guido Rossi, who replaced Tronchetti Provera as chairman of Telecom Italia, goes forward with the plan to separate the mobile telephone from the fixed lines, and it is then offered for sale to a foreign company, your government would not object to that?

PRODI: We have no instrument. I can be not happy, of course, you know, because I want my country open to purchases, mergers, acquisitions from outside. But I am happy when this comes from both sides. You know, you can’t have a country in which you are always object of acquisition and never subject of acquisition. This is—I think that you understand, you know, the political point of view. You had a country lost. But I am engaged. And I always take the view the market—to respect the market—(inaudible).

When the two biggest—two of the biggest Italian banks they merged together, I didn’t know it before the decision, but I was absolutely happy because Italy had a strong—an additional strong bank, Sao Paulo and—

GARDNER: Intesa.

PRODI:—Intesa Associated, that will operate in the international market with more business. This is—I think this is a correct government reaction, you know. Before the Common Market, I should have intervened. After that, simply not.

GARDNER: Next question.

Yes?

QUESTIONER: Jeff Laurenti at the Century Foundation. Of all the major Western countries, Italy appears most to have assimilated that 1960s exhortation, “Make love, not war.” And the Rome government has indicated pretty clearly this deployment in Lebanon is not to be one of combatting Lebanese militias, but, rather, to be a kind of energizing agent for a broader peace settlement.

Let me ask, particularly with regard to Syria, which is right next to where your and the other UNIFIL troops are going to be stationed, the Labor Party in Israel have been floating the notion of opening negotiations with Syria, and the word came down from Washington: We don’t want to hear it.

Is Italy—is the European Union going to be pressing to open negotiations on that front, as well as on the Israeli-Palestinian track? And to what extent will you do that separately, or hide behind—not hide behind—but rely on Solana and the EU to handle it on behalf of all the European countries?

PRODI: I didn’t understand the last—sorry.

QUESTIONER: To what extent on the Israeli-Syrian, Israeli-Palestinian track will Italy be an agent in its own right, now that it has leverage from the UNIFIL leadership, or will it be entirely behind Solana, and it’s the EU that will do all this kind of business?

PRODI: Well, to this last part of the question, I answer that we always act with Solana. I take—also my initiative that I take, I never do them without telling to my European fellows, let’s say Solana, and sometimes Chirac, if the problem is concerning specifically—(inaudible). But all what we have done, we’ve done with the agreement with Europe, sometimes taking the initiative.

Let us—(inaudible)—of the Syrian-Lebanese border. When in my conversation, I called—no, Assad in this case he called me. But anyway, we were in contact also. This is another reason why, you know, you have experience in the Mediterranean area, you know Assad—I knew his father. You know. I don’t know many of you have had meetings with Assad’s father, because it was quite an experience. (Laughter.) No really, because the meetings they never were less than two hours and a half, and in the first hour you never could talk about problems more recent than 2,000 years. (Laughter.) This was—you know, this is Syria!

And then I told him, look, I can understand that you don’t want troops patrolling your border. But I think that in front of the international community—because I think that he has an attitude much more open than he thinks—and will come out, will come out. I think that if you accept European civilian, not in uniform, not with arms, let’s say (funzionare ?) or (technician ?) on the border, it will be helpful. It will be a small (message ?), but important for the international community. And we are going on, you know, and the French were—(inaudible); Solana pushed it. And we are working, as is already known, in this direction. And I am confident that we arrived to this non-—it’s not a revolution, but you understand how important it is that there will be—(inaudible)—if there are weapons, (took?) some control, at least for the big things. You know, I am not telling you that no weapon will pass the Syrian border. But it is an enormous change I am working together with them or—(inaudible). But I never did any of this—(inaudible)—not calling Solana and not telling Assad that I should have called Solana and Bush and talked to Bush and talked to everybody.

I had with George Bush a clear conversation concerning my conversation with Larijani. And Larijani knew that I was telling to Bush. This is—what I perceive (this summer ?) is that people did never talk each other, but never, never, never. But can you (believe ?) to have a war without even knowing what is happening? (They know ?) the Middle East. This is my surprise about the Middle East by human (spying ?). Of course, now I’m not talking as a politician. I am talking as a human being here. But I never—(inaudible)—(did you never ?) called Assad (terror ?)—okay, never to say have a (happy birthday ?)? No? But if this is politics, I don’t know. You know, this is—the humanity might be—must be in some way protected in a more efficient way. This is what I think, you know.

GARDNER: Ralph.

QUESTIONER: Ralph Buultjens, New York University.

Mr. Prime Minister, a little bit earlier, you spoke about your strong support for enlargement of the European Union. Do you support the entry of Turkey? And what do you think the possibilities of that happening in the next few years are?

PRODI: My clear idea of enlargement—and this is what—(inaudible)—is—you know, in the beginning, the common doctrine was 10 years, five countries. I—(inaudible)—10 countries, five years—why you cannot stop—(inaudible)—history is history. You have to react. This was ready, you know, and I think was a fantastic success, the biggest export of democracy ever had in the world, you know. This is true. And in terms of economic growth, also in terms of change. Bulgaria, Romania, 1 st of January—(inaudible)—this process will run because my fear was that (was ?) stopping, because they were discussing about the so-called capacity, digested capacity, or an (absorption ?). And the next step is the Balkans. We spend more money to keep soldiers in the Balkans than any possible European aid for the enlargement, (upsurge in/absorption?) capacity. All together they had 1 percent of European GDP. If (you’re poor?), 5 percent (to/or ?) 1 percent is nothing. It’s clear.

So now Croatia, then Macedonia, that we prepared with the difficult coexistence between Serbs, (Slavs?) and Albanians—you know, that I hope, you know, Serbia, Albania. Don’t forget what was Albania 12 years ago, and they take a (mission?) to Albania, an episode that has been underestimated, but it was a test run, absolutely successful—risky. The country was in disarray. We worked. We helped. But then we withdrew in three months without any casualties because it was needed in the moment, you know.

And then Turkey. Turkey is an enormous problem, not because of Turkey but because of Europe. After the referendum, the European public opinion is clearly changed. Before the referendum, a month ago, maybe it was only Austria against. Now clearly European public opinion is in moment of change. And so my opinion is that Turkey must come in, but with patience, long negotiation. If you want to push it too quickly, the process will break down. This is what—but in the meanwhile, what I proposed, the so-called “ring of friends” or neighbor policy to say that European proposal to all the countries—(inaudible)—20 years, 25 years, but (this is important ?)—all the countries, from Russia to Morocco, to share everything but institutions. Let’s say not only market policy but research, but—(word inaudible)—but not being part of the parliament, the commission. And I hope that this process will start soon, because it’s absolutely important. Russia is not eager to participate (to that ?) now, you know. But other countries, they are probably wanting to do it.

GARDNER: Steven.

QUESTIONER: Mr. Prime Minister, Italy has long sought a permanent seat on the U.N. Security Council. Are you still seeking that? And do you have a candidate for the next secretary-general?

PRODI: No, I have no candidate for the next general secretary. (Inaudible)—in the corridors there was this common mood for a (Canadian ?), but I didn’t get into that program.

For the Security Council, we are (certainly?) for a reform because the Security Council must represent the new world and not the old worlds. And it’s time to start real negotiation, not to have these schemes, abstract schemes that don’t—that have no possibility to be implemented. So tonight we shall have a dinner with 60 states who share different opinion about that. It will be (chaired?) by Musharraf and me, just to start the discussion about that. (Inaudible)—exchange of opinion, you know. But I think that very soon you must start concrete discussion, because otherwise will be an never-ending discussion, you know.

I don’t think that—now, this part may be (utopistic?) but there is something wrong if you don’t include the General Assembly in some big decision. Difficult because you have over 200 countries. But you feel that there is something wrong if you don’t have a more vital role of the General Assembly. This is my opinion. But on this I—(inaudible). But you need it. You need it.

GARDNER: Perhaps it should be added that Italy is the sixth largest contributor to the U.N. budget, second to none in contribution to U.N. peacekeeping operations. It’s going to be on the Security Council starting January 1 st as a non-permanent member, but it will have to wait something like eight or 10 years—and perhaps it’s not satisfactory to you that you get on the Security Council once every eight or 10 years and you feel you should have a better voice. Is that a fair conclusion?

PRODI: (Inaudible.)

GARDNER: Now, I have to ask the president here, President Haass: We’re supposed to stop now, but do we have your permission to have five more minutes with—

PRODI: Yes. Yes.

GARDNER:—because this is so interesting.

PRODI: (Inaudible.) (Laughter.)

GARDNER: I think there’s such an interest that a lot of people who still haven’t had their questions—this lady here has been very patient, and maybe one or two.

Yes.

QUESTIONER: Thank you. Joanna Weschler with Security Council Report. Steven (sp) asked already part of my question, but most elected members of the council usually come for the two years with a set of goals. Could you perhaps tell us, other than the Security Council reform, what will be your priorities when you are on the council?

PRODI: Well, the priorities, what I told before—you know, my analysis was (strengthen?) the regional policy. I say Europe. But I (worked with those ?) to head the African Union, you know, because I think that you can’t go on with the Africans—we never talk about Africa when we talk about this, but Africa is a disaster, you know. And you need the regional—to have these regional entities, and so on. I understand now that African Union troops are in Darfur. They must be substituted because they are not sufficient, you know. But the program could be to make them efficient, you know.

But the problem would be to make them efficient, you know, and in the long run, (I tell ?) the European Commission—I’ve given money for starting this African Union security force in order to (work the conflict ?). And this is my main policy, reinforcing that—(inaudible)—before and for the Security Council, as I told, to try to shape it as the world is today—absolutely difficult because you can’t cancel the past, you know. I know that this is a difficult job, you know, but it probably will end with simply an enlargement of the existing members, you know.

GARDNER: Maybe one last question from the back. The—gosh, I don’t know your name. The woman there with her hand up. Yes, yeah. Thank you.

QUESTIONER: Thank you. Karen Mills from Solera Capital. Italy is well-known for picking certain industrial sectors or clusters or economic areas where it’s been very successful in terms of competitiveness. And it’s not just shoes which we all appreciate, but it’s also industrial parts. What lessons do you think the U.S. could learn from your competitiveness approach?

GARDNER: And this is a professor of industrial economics—

PRODI: Yeah. (Laughs.)

GARDNER: So—that’s how you started your career—

PRODI: I did that job for 25 years, you know.

Well, I am not very much to teach to others, you know, because our infrastructure is very peculiar. (Laughter.) No, in the sense that we are specialized, you know. Of course, we have “Made in Italy.” Looks very good. Food’s a business—(it’s not quite as important?)—but our core industry is instrumental groups, not (master units ?). If you have the machinery for, let’s say, a rowboat, what you produce in 10,000 will be Japanese. If you produce 1,000, it will be German. If you have 50 different rowboats, making different things will be Italian, you know. (Laughter.) It is the type to give you the type of skill that we have.

And, of course, we lost big companies. We are out of pharmaceutical. We are out of big energy power station production, either nuclear or traditional. We are out of sectors in which we were powerful a few years ago. But we are increasing in this (middle-sized ?), very, very specialized instrumental group companies. And right around, let’s say, 2,000 companies between $500 million saved per year and $2 billion—you know, this is our—and that is not (a negligible triumph ?). This makes Italy, in terms of manpower and added value, the (second-most ?) industrial country in Europe, you know, second only to Germany.

But we have not leaders. We have not big companies, and so my (direct ?) policy is to behave coherently with these, too. (Had this killed the nerves ?) between them to make these companies fit for the new globalization—but remember, this is why I am so attentive to Asia and this may be useful, of course, (for your question ?) for U.S.

When you have 6 billion consumers and not 1 billion consumers, you know, that is (called ?) small specialized production. They have (proven it ?), and so I am not pessimist for the (security ?) of the count, because if we keep this—(inaudible)—let’s say, if you produce (popular-time ?) machinery and you have to fit each year 50 new Chinese factories and you multiply in so many fields, you may have a space in the future of manufacturing.

What I am worried more is services, modern services—finance, communication, and that in which it is much more difficult to find this, let say, special mosaic of our structure. This worries me much more than tourism, you know, in which we were dominating and we lost market, because we have not—in this case, if you take what was the biggest tourist country in the world, we have no Italian hotel chain, some luxury hotels put together. But in the—let’s say what is the bulk of tourism, they are Spanish, German, French, of course American, you know, but there is no Italian. And this is what I want to do, you know, to try to reinforce services because this will be necessary for our future.

GARDNER: We should not forget that the president of the United States who takes office on January 20 th of 2008—2009, will be flying in an Italian helicopter—

MR. PRODI : Agusta.

GARDNER:—AgustaWestland, part of Finmeccanica. You can take some pride in that, too.

Well now, we thank you. I think you’ll agree with me, we’ve had many heads of government speak to us. I can’t think of many who have spoken to us so clearly on the record, answering the most difficult questions as eloquently, forcefully and honestly as Romano Prodi. We thank you very much. (Applause.)

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