RICHARD N. GARDNER: Good morning. Welcome to this special meeting with the president of the Republic of Italy, Giorgio Napolitano. The subject: The United States, Italy and Europe.
Please remember to turn off your cell phones, and this is an on-the-record meeting.
Like many of you here today, I have a special affection for the people of Italy and a sincere appreciation for what Italy has contributed to the world and to the United States over many years, and its contribution also today.
To take just one current example, Italy is one of the largest contributors of personnel to international peacekeeping operations. When others hung back from providing troops for the U.N. force in Lebanon, Italy stepped forward and helped bring an end to the conflict there. And today Italy is participating in NATO training operations in Iraq and is taking command of the Kabul region in Afghanistan.
This morning we have the unusual honor of having President Napolitano with us -- a true European statesman, an internationalist, a man with a sense of history and a broad historic vision, a passionate supporter of European unity and a genuine friend of the United States and, if I may add it, an old friend of mine.
President Napolitano made history in the spring of 1978 when he was the first member of the Italian Communist Party to speak here at the Council on Foreign Relations. And President Napolitano, diligent research in libraries all over the world and finally at Princeton -- we found a document of that meeting, the announcement of your meeting, April 14, 1978, right here, and even a summary of what you said and what was said to you. So I have the pleasure of giving you that for your collection.
In nearly 30 years since then, you have been a major force in transforming the Italian Communist Party into a true Western social democratic party, first as the Democratic Party of the Left, Democratici di Sinistra, and now recently transformed into the Democratic Party, in an alliance with other progressive forces.
You've been a member of parliament for nearly half a century, president of the Chamber of Deputies, minister of the Interior, member of the European Parliament, where you chaired the Constitutional Commission of Europe, and you were given the rare honor of election of "senatore a vita," senator for life, just in 2005 and then, in 2006, president, the 11th president of Italy.
So please join me in welcoming President Napolitano. (Applause.)
The president will make some remarks. We will have a brief conversation, and then we will open to your questions.
PRESIDENT GIORGIO NAPOLITANO: Thank you, Rick.
It is absolutely true, first of all, that we are old friends. And I thank you also for promoting this meeting and for being here this morning.
When we met a few minutes ago, you observed that in my autobiographical book I conclude without foreseeing to become president of the Italian Republic. And you are right. Honestly, the conclusion of the book was a farewell to arms, and it was time for me because I have been for such a long period a member of the Italian parliament, politically and culturally active, a member of the European Parliament. Thirty-eight years in the House of Deputies and five years in the European Parliament make 43, and that was absolutely enough. (Soft laughter.)
So I retired from parliament, and I couldn't expect that the particular situation after the general election of last year in Italy would create the conditions for being asked to be available for the election of the president in parliament.
I must say that I thought at that moment that there could be a very vast majority on my name because I was never too partisan and I had some demonstrations of my capacity to be impartial, both as speaker of the house and as minister of the interior. But you know that Italian politics is a land of permanent, very sharp conflict, and so although there were some important representatives of the present opposition who took a position in favor of my candidature, at the end the center-right political groups in parliament did not vote for anybody opposite to me, but did not even vote for me.
Of course, that didn't change anything in my approach. I was determined to be and I have been trying in one year and a half to be the guardian of constitutional principles and rights without any favor for any of the two opposite political groupings. It is not an easy task and it is not an easy job. Perhaps we'll have the chance to discuss more deeply this point, this aspect, if you are interested in, but I am here particularly to emphasize the continuity in my commitment to friendship between Italy and America.
I read the notes of this very old meeting, and I hope not to find anything to be ashamed. (Chuckles.) I am sure that I'll find the continuity we are speaking of. Of course, not only my capacities but also my ideas have changed, and I think that it's a very important condition for any politician and for any cultivated person to be open to change, to revise also deeply his own positions on the basis of the experience and on the basis of new realities in his own country and in the world.
So I'll be very glad to answer your questions; that the topics are what you said -- Italy, Europe, United States. Please.
GARDNER: Can we begin with Italy? Many people really don't understand what does the president of Italy do. (Laughter.) Is it just a ceremonial position? Does he have any real power? Does he have "autorita morale"? Does he use the position to speak to the country, give it some influence and direction? How do you see the role as president? How can you be a unifying element in a country still riven by, as you said, so many divisions?
NAPOLITANO: Well, it's not a unique figure because in Europe there is a number of non-executive presidents. In Germany, in Austria, in Portugal and in some other countries, presidents have no -- not executive powers. In the south where there is a so-called semi-presidential system, the president of the republic practically is at the same time the chief of executive power, although there is a prime minister who has a more formal and substantial authority.
And of course, to play this role is rather complicated because, according to our constitution, I cannot, of course, say anything about the political competition in Italy. I cannot say anything as regards the merit of the solutions which had to be given to any problems -- any problem. You cannot stand for or against a bill in parliament. You just have to sign the bill to authorize the presentation of the bill to the parliament, and after it has been submitted to the parliament and finally approved, I must authorize the publication of the bill. So we would say that's very, very little.
But I can say that there are also different interpretations of the role. Not all the presidents of the Italian republic intended in exactly the same way this role. It depends on person, on experience, on personal characteristics of the president.
As regards me, of course, it is impossible to -- not to take into account what I have been, and that is to say a political figure, a parliamentary authority. And so I follow very closely legislation, political discussions, but with a strong sense of the limit, and it is very important. According to the constitution, I have two specific powers which are rather important. First, I share the so-called Superior Council of Judiciary -- (speaks in Italian) -- and I chair the Supreme Council for Defense. They are, of course, collective bodies. They decide particularly -- the so-called Superior Council of Judiciary -- they decide by vote on a majority basis, but of course, I play an influence in the discussions I chair, and also, as regards to the Supreme Council of Defense, I intend my role is to ensure the decisions are taken, which can be shared by the great majority of political forces in parliament, because we need, of course, a security policy, a defense policy and, I add, a foreign policy as much as possible shared.
As regards to the way to influence many other decisions and also, for instance, in the debate which is now currently going on on electoral and institutional reforms and to guarantee the respect of constitutional rights, including, of course, the rights of parliamentary minority. I am supposed to have some more observation powers. I said in Italy and I repeat here, I can assure you they are rather enigmatic powers; nobody can define them, nobody can be sure they were really translated into anything completely perceivable. But after all, if you insist on some ideas, on some needs of the country, just delivering messages, speaking as much as possible not only to political forces, but to the citizens, to the political opinion, to the public opinion, you can see some results.
For instance, just one, you have the power also as president of the parliament to send messages -- formal, official messages to the parliament to draw the attention, to hold the attention of the parliament on some problems which should be dealt with and finally solved in parliament.
And I shall have a very particular moment, as my predecessors, in a few weeks. The last day of the year, I address citizens on the television. There is a unified television broadcast for this message of the president, who speaks to the Italians. It's one of the most difficult tasks, I must say, because you should avoid rhetorics, you should avoid all the vague concepts; but it's an interesting exercise, and I found out last year that it had a certain effect.
GARDNER: On page one of the New York Times this morning, there's a big article about Italy, which gives the impression that you're going through, well, a difficult period. And Americans know that there's been a historic, a chronic problem of instability in government -- 61 governments since the Second World War. You have 50 or more political parties, nine in the governing coalition, four in the opposition. Electoral law reform is something that seems urgent, and I know it's -- we can't ask you to take a position on a specific reform, but do you feel optimistic and can you play a role behind the scenes in encouraging some changes that might give Italy that degree stability which up till now has been missing?
NAPOLITANO: Yes. If we speak of the more than 20 years of the Italian Republic, we must remember that there has been a certain dividing line before 1993, which was the time of a radical electoral reform, and after, and that electoral reform in 1993 was the consequence, we can say, of a complete changing of the political scene, because many historical parties collapsed. It was very difficult to find new equilibria. Some new political forces came to the surface or suddenly were announced.
And the law we adopted, the electoral system we adopted in 1993 was a first-past-the-post system, single-candidate constituencies, no more a proportional machinery, except for one-fourth of the members of the House to be elected -- 25 percent -- were still elected on a proportional basis, but the threshold of (4 ?) percent to touch up to -- in order to have representatives.
Until '93, we can say you are right, so many, so many governments, even if -- and this is a remarkable difference -- the leading party was always the same. We had so many governments, but with one party always at the center of this coalition government, and it was the Christian Democratic Party, about 40 percent -- 42, 38, once 48 -- percent of the electorate.
I remember that at that time some commentators noted these are not crises, these are simple reshuffles, because very little changed at that time. Not only, of course, a single minister or some ministers and even prime ministers, but also the allies, there was a turnover of the allies of the Christian Democratic Party. For a certain period, three parties, including, I don't know, the Liberal Party. In another phase, the Republican Party. Then the Republican Party, which (withdrew ?), and the Socialist Party finally got in the system of the alliances of the Christian Democratic Party.
After '93, it has been fashionable to say that the so-called "first republic" was horrible. I think it was an absolutely unbalanced judgment. First, I don't like numbers for the Italian Republic. It is a French tradition -- "la troisieme, la quatrieme, la cinqieme republique." (Laughter.) We don't -- we have no reason to mark with numbers the evolution of the republic, which is always the republic founded in 1946 by a popular referendum and based on a constitution, which was adopted by the end of '47.
But essentially different is the situation created by the big turning point of '93, the crisis of the Socialist Party, the crisis of the Christian Democratic Party, many leaders put aside and new people emerging and a new party emerging in particular, which was the Forza Italia Party, founded by Silvio Berlusconi.
Since then, and also as a reflex of the new electoral system, there has been a much more adversary politics, no more consensus but adversary parties, and a correct rule of alternates in power. Italy didn't know it for 40 years, because the biggest party of the opposition was rightly or wrongly excluded from any possibility to participate in the government of the country. Dick Gardner remembers very well. He was your ambassador in Italy in that period. We had, for less than three years, a very strange government, supported by all political parties but composed with representatives of only one party that is a Christian democratic party. And that was the first occasion for the Italian Communist Party -- (inaudible) -- to participate, let's say, in shaping government policies, although staying --
GARDNER: -- out of the executive.
NAPOLITANO: -- out of the executive.
GARDNER: Communist Party was part of the parliamentary majority but did not hold ministerial positions.
NAPOLITANO: That's right, yes.
And when -- (inaudible) -- was born, it was called Government of Abstentions. Because political parties which wanted to support, from the Liberal Party to the Communist Party, support the government, they abstain.
GARDNER: (Remarks in Italian) -- the Government of Non-Lack of Confidence -- very hard for an American to understand. (Laughter.)
NAPOLITANO: I admire Dick, who still remembers that very original formula, but we were inventors of many formulas in Italian politics. (Laughter.)
As a matter of fact, Dick, from '96 to 2001 and from 2001 to 2006, only two governments.
GARDNER: That's true, yeah.
NAPOLITANO: That was a very important difference with the past. For five years a center-left government chaired by Romano Prodi and for five years, a center-right government chaired by --
GARDNER: (Remarks in Italian.)
NAPOLITANO: This has been an achievement to safeguard. But I don't want to be too long. I apologize. But you know, also the consequence of a very different and very negative electoral law, we have two coalitions, two opposite coalitions, very heterogeneous, and, at the same time, a terrible fragmentation of the political scene.
And so we have on one side, six or seven, eight parties, on the other side, more or less the same number. And they were obliged by electoral law to stay together, because there was a so-called majority prize. The coalition, which will result with the first one among the two, will get a certain number of seats in parliament. And in order to obtain that prize, you, as a head of one of the two coalitions, you need also the last 5,000 votes. So you have to pick up also very small fragments of our political representation.
So heterogeneous coalitions means undecided when they had to take an important choice, with a lot of internal quarrels and disputes and no transparency practically in the political competition. That's why we are trying now -- they are trying now, because I don't vote -- they are trying in parliament to adopt a new electoral law. It's not easy. It's not easy, because we have a terrible -- I said yesterday that I just read, thanking the ambassador, who had this book in his shelf.
There is a book titled "The Second Civil War." I don't know what is the effective value of the book. I didn't have yet the time to read it but I picked up a very interesting concept.
The author says that in America there is now a hyper-partisanship. I don't know if it is true for the United States. It is absolutely true for Italy. We have a hyper-partisanship also. When two opposite parties like the Democratic Party and Forza Italia discuss on the possibility to share a new electoral set of rules, all other parties find a reason to be against. So this is the situation and this is the climate. And perhaps the most important thing in Italy is to change the climate of political competition.
GARDNER: And in your book you speak eloquently in your last chapter about what you call the deterioration of the political culture, the excessive partisanship. And we Americans can understand because we, I think, perhaps are suffering a similar problem.
Now may we turn for a moment to Europe. Today, the very moment of your visit here, is a historic day for Europe because the new reform treaty is being signed, and you were chairman for years of the Constitutional Commission of the European Parliament. Now, this is also a complex matter, but in a few moments can you summarize what does this new treaty do which we Americans should know? Will it make the governance of this enlarged Europe -- now 27, maybe to be enlarged even more, members -- does it make the governance of Europe easier? And how do you see the emergence of Europe's role?
NAPOLITANO: The idea of a constitutional treaty represented an answer to two exigencies. First, when so many new states entered the European Union, we had to put in evidence in a very serious and well-organized manner what are principles and values, the goals, the objectives, the fundamental missions of the union. And we needed something more than a simple treaty like in the past. We needed a constitution or a constitutional treaty. That was the first reason.
The second reason for such a treaty was to have new institutions able to govern no more a six- and not even 15-member countries union, but a 27-member states union, and so to have more majority votes, less unanimity, more majority votes, to have more effective powers for the commission, more effective powers for the parliament, to have a more stable president of the European Council. You know, the council is the institution in which governments are represented.
And we need also, if we want to look at the future and if we want to implement a common foreign and security policy of the union, we need a new figure to take care of this, a veritable European foreign minister. That was more or less the constitutional treaty, which was the result of many years of discussion, from 2001 up to 2004. And the discussions took place also in parliament and in the commission I chaired for five years.
The treaty was signed in 2004, October, in Rome. Twenty-five heads of state and government solemnly signed the treaty. After having signed, some of them forgot (they were ?) signing; yes, particularly I must say that the United Kingdom and some other countries which were reluctant to ratify the treaty. Eighteen member states did ratify the treaty. Two rejected the treaty by referendum -- France and Netherlands -- and five were just looking at what would happen, probably with the intent to get rid of the constitutional treaty they had signed.
The conclusion has been a new compromise. Already a constitutional treaty was a compromise, of course. It was not perfect, but according to me, it was a high-level and acceptable and rather effective compromise. New compromise would take into account particularly the position of France, and it was absolutely necessary to take into account because France has been one of the main actors of the European integration. And all of us, we were interested to have again France fully engaged in the European process.
The compromise has led to a new treaty, which is not, as President Sarkozy announced, a "traite simplifie." (Speaks in French) -- as a matter of fact, because the Constitutional Treaty was a completely a new treaty, replacing the old ones. Now the way which has -- the road which has been chosen has been a road of modifications, amendments to single articles of single treaties. Three treaties in the past -- each of them have been amended in some points, and the new treaty is simply the collection of these amendments, impossible to read. But -- (speaks in French) -- "traite constitutionnel."
Anyhow, it has been a necessary -- inavoidable, at a certain point -- compromise. I think that the German chancellor, Madame Merkel, has made very good work, very -- and the result has been this new Lisbon Treaty, the name of Lisbon --
GARDNER: And it embodies the main --
NAPOLITANO: The meaning of it.
GARDNER: -- true innovations.
NAPOLITANO: But without the ambition of a Constitutional Treaty --
NAPOLITANO: -- without the name of constitutional or of constitution, without the symbols, without some important, anyhow, features of the constitutional treaty. But the main innovation's that it was able -- stable president for two years, and even up to five years of the president of the council, no more a foreign minister, because the United Kingdom particularly refused the name -- after having accepted it, refused the name of foreign minister, high representative, but with more powers than the old high representative, a figure --
GARDNER: And the voting system is also there, the new voting system, for majorities --
NAPOLITANO: Yes, the new voting system, with some attenuations, and with a delay in the starting of the application, because that was --
GARDNER: Because of Poland, the Polish, yeah --
NAPOLITANO: That was the retention of Poland.
NAPOLITANO: So I think, anyhow, it's a new beginning, and it can be the beginning of a new period of development of the European integrational process in new directions in order to answer the new challenges of our time, particularly on the international scene.
GARDNER: One more question, and that is, you met with President Bush two days ago. It wouldn't be proper to ask you to tell us everything that was said, but are you in a position to tell us the main topics that you addressed and make any observations that you wish about how relations between the United States and Europe today are, in your opinion, and where we can cooperate more on some of the major issues that confront us?
NAPOLITANO: Yes. Just a (small premise ?). When a non-executive president meets another head of state, he usually is accompanied by a representative of his own government, and the foreign minister was with me because I cannot take position on some problems, the competence for them belonging to the parliament and to the parliamentary majority. But as regards the main lines of our foreign policy, I was sure to be able to represent the complex positions which are represented in the Italian Parliament.
As a matter of fact, also before leaving for Washington, I wanted to have a consultation with the leader of the opposition. And so I had the possibility to say to President Bush what I'm saying now is not the position of the government only or of the majority in parliament only; it's the position largely shared by the public opinion and by the political forces of the two opposite groupings in parliament. And that is to say, to take our responsibility -- Italy is a part of Europe -- to strengthen relations with the United States; more generally speaking, our transatlantic relations; to stick to our commitments in NATO and within the United Nations; to improve the dialogue between European Union and the United States. And I think that was appreciated. As you said at the beginning, there is much appreciation also at the level of the president of the United States for what we are doing in several critical areas in several regions with our soldiers.
At the same time, I had to stress that for us, these missions, in Lebanon, in Afghanistan, in the Balkans, are not purely military missions. We need the military instrument, and we cannot escape our responsibilities -- which means also casualties, as it happened recently in Afghanistan, for some of us, of our soldiers -- but it's fundamental, in order to have a successful mission, to accompany the military instrument with political, diplomatic, economic initiatives to help population, to help in rebuilding institutions, to help in reconstructing economy. And in this case, the military instrument is essential but not exclusively decisive.
That -- there (was a/wasn't ?) complete mutual understanding, I must say. Of course, there are some very, very hard problems, particularly Kosovo. And we spoke about this, and we spoke because we are concerned for the implication of consequences of a unilateral declaration of independence for Kosovo. Even more complicated, of course, is the problem how to face the threat of a nuclear Iran. We are very firm in perceiving this threat and in rejecting the idea of a proliferation of nuclear states starting from Iran. And it will not stop there if there were such a weaponization of the nuclear program of Iran.
How to realize this objective? It's a matter for discussion -- how to combine sanctions and incentives, sticks and carrots, how to have more proposals to -- more offers in the dialogue or in a tentative negotiation with Iran. But I think our positions and the positions of the Italian foreign minister were listened to with great attention by the president.
GARDNER: Thank you. Now may we have some questions? And when you rise, there's the microphone. Please give your name and identify yourselves. Here's the first question. Yes? Please.
QUESTIONER: Thank you. Mr. President, Mr. Ambassador --
GARDNER: Your name?
QUESTIONER: -- my name is Anna Guaita. I'm correspondent for Il Messaggero, an Italian newspaper. Mr. President, maybe this is a little bit out of the field, but next week, the General Assembly of the United Nations will vote on a proposal for a moratorium of death penalty. Italy has been one of the main sponsors of this proposal, and we journalists that work here in the United States, Italian journalists that work here in the United States, have the feeling that the American public is not even aware that this is happening. I was wondering if, in your meetings at the highest level, have you had any feeling that the opinion-makers in the United States are aware of this proposal going on? Thank you.
NAPOLITANO: Well, the awareness of a public opinion and even of political leaders is a mystery. I'm not able to give an answer and to make an analysis on what they think.
It has been an important initiative, I think. It was a necessary answer to a feeling, to a problem, which is, after all, a problem belonging to the sphere of human rights.
We know very well that the American representative will vote against in the General Assembly, but at the same time, I have the impression that the United States will not dramatize this difference of opinions, and at the same time, I think that it is correct on our side, as the main sponsors of this initiative, not to (spectualize/speculate ?) too much. It's an important decision. We want to put it in evidence, but without exaggerating. Just because we are interested in not having an opposition between yes and no -- we hope that in the future, the number of yes will increase and that there will be no prejudicial on the other side.
GARDNER: Another question.
QUESTIONER: Mr. President, my name Ravi Daldaram (ph) of Al Hayat, and I -- my question is about your missions in different places, including Lebanon.
Italy is part of a troika that has recently succeeded in bringing Syrian influence to Lebanon back from the window after having the international community succeeded in getting Syria out of the door of Lebanon. You did that through giving them a role in the elections of the president.
Why are you doing that? Are you afraid that there will be a revenge of your troops that are serving in UNIFIL? Is there any explanation for the European bowing to intimidation at a time when political assassinations continue -- including, of course, the second man in the army yesterday? And is this a coincidence that it coincides with the United States taking a turn, a shift of policy with Iran and Mr. Brown of the United Kingdom speaking of a dialogue with the Taliban? What's going on? Is this synchronized, or off the top --
GARDNER: That's a very complicated question, but --
NAPOLITANO: Yes. It's a rather complicated question.
Anyhow, our engagement in Lebanon is very serious and we have more than 2,500 soldiers. And our mission is developing very well because relations between the Italian military force and the population is very good. We are really welcome. We do our best to deserve this recognition of the Lebanese population.
At the same time, as I was saying before in general terms, our military presence is not enough to give a solution to the problem of an independent and stable Lebanon. That requires more political initiative, particularly in this moment as concerns the election of the new president, overcoming the disputes which are still very deep between the different political groups.
We are convinced that it's necessary to involve Syria in discussions. To involve Syria in discussion doesn't mean to be ambiguous on the necessity of a fully independent Lebanon. But the way to solve certain situations implies the participation of external countries; in this case, Syria. How I read with great interest a few months ago the Baker-Hamilton analysis. And while it was focused on Iraq, of course, in that case, the idea was it's necessary to find a negotiation road with both with Syria and Iran. And I think this is a wise approach, generally speaking, and also for Lebanon.
GARDNER: I think this gentleman had a -- next question.
QUESTIONER: Dan Calibrun (ph) of the World Economic Forum and Harvard University.
Mr. President, quick question on Italy and the role of Italy in a global governance. Italy has traditionally had -- played a big role in global governance. Italy is a G-8 country and certainly a major player. At the same time, new Asian powers are emerging or have already emerged. Should Italy, regarding its role in global governance, focus on specific issues, on -- or specific regions; identify niches for its actions, like countries like Canada or Norway? What do you think about this?
NAPOLITANO: Italy's in favor enlarging the G-8. Also, taking into account the difficulties of the United Nations system, the G-8 represents a very important forum to accept the new reality of emerging countries of Asia. And that could be a good beginning. Anyhow, Italy has this very clear position.
In 2009, the G-8 will take place in Italy. I don't know if already in 2008 something can be done in that direction, but I assure you Italy is committed to have a new development in the G-8 system.
GARDNER: You would say we are bringing China, India, Brazil --
NAPOLITANO: That's right, because now, as you know, they participate out of the G-8, but --
GARDNER: Yes. They're invited, but they're not formal --
NAPOLITANO: Yes. Yes. I think that is a solution which at least should be tried.
QUESTIONER: Bill Drozdiak, American Council on Germany. Mr. President, a number of opinion polls suggest anti-Americanism is stronger now in Italy and Europe than in recent memory, and that this phenomenon goes beyond the unpopularity of George Bush and the war in Iraq. What do you think needs to be done to halt this phenomenon? And what advice would you give the next administration?
GARDNER: You see, you're not getting easy questions at the council, Mr. President, but I know you can handle it.
NAPOLITANO: (Inaudible.) I'll not be partisan in my answer.
Anyhow, I think that the first thing to do, and it's the most important one, is to distinguish between relations with the country and relations with the government of the day. It's a not easy attitude, but it's essential; for instance, also as regards Israel. We have in Italy, in Europe, many doubts or critical positions towards the policy of the present or of some previous governments in Israel, but at the same time, it must be absolutely clear that the attitude of our country or our people towards the existence of Israel, the right of Israel to security, and the contribution of Israel to the international community, is another thing, which must not be confused with criticism towards a single government. And I think more or less it's the same for the United States.
I wouldn't say -- of course, I respect the polls up to a certain extent. I'm not so enthusiastic about the polls always. They can also be misleading. I wouldn't say that there is a growing of anti-Americanism, by sure not in Italy, and not even in the rest of Europe. There has been much criticism, for instance, of a difficult war in Iraq. But also in the past few years -- particularly in France, not only in Italy -- and in France, if you want, that the problem was even more complex than in Italy -- there is a more careful reaction to the decisions of the present administration, which are not always criticized, because, for instance, now Italy is appreciating very much the new commitment of President Bush to foster a negotiation between the Palestinian authorities and Israel. We must be not so dogmatic and we must avoid a confusion between countries and governments.
QUESTIONER: Bruce Gelb, Council of American Ambassadors. Mr. President, I've been listening to a very interesting presentation on your part, but I can't help but think of the first thing that Ambassador Gardner said today, a strange coincidence that on the day that you are addressing the council, the front page of The New York Times has a major story which, if you read it uncritically, would indicate that Italy is going down the tube, if I can use that old expression.
And what I specifically mean is -- your comments have been dealing with Italy as a part of the European Union and Italy's involvement in far-flung countries and their problems, but you have not addressed the issue which long term makes or breaks a country, and that's the economy. And what caught my attention more than anything else was your position relative to foreign investment relative to Spain, which a few years ago, maybe a decade ago, was far superior; now it is not even in the same league.
And I'm wondering, is Italy still suffering from a kind of hangover from "cappuccino communism," where they can't get straight that there's a thing called market economy and you've got to open up your country and let people start businesses, entrepreneurial activity? What is your feeling about Italy and its economy and the future?
NAPOLITANO: Well, I don't think Communism has much to do with these problems and with the situation of Italy, which is not an easy situation. I don't want to give the idea to be, how to say, superficially optimistic. We have a serious -- a series of problems regarding the economy which must be absolutely faced. Because we have an unsatisfactory rate of growth, we have always have a very big problem, which is represented by a huge public debt, which was the heritage of the '80s, of the past century.
So we have every year, you know, only for the debt -- public debt service, to spend a lot of money on our budget, and we have a lot of constraints we must get rid of.
In the past 10 years something has changed remarkably in the structure of the Italian economy. It was very much an economy dominated by the public sector, but there has been a process of privatizations -- in spite of communist ideology, there was no problem of this kind -- a process of privatizations, which has been more extensive, for instance, than in France. There's now much more weight of the state in the French economy than in the Italian economy.
We need a liberalization policy. And as a matter of fact, also, when there has been a center-right government, liberalizations didn't go very far, not because of ideology but because there are vested interests, corporations, which resist very much to any change which can affect their privileges. And we see it almost daily in Italy, including -- I don't know -- taxi drivers. If the town administration in Rome decides to have more taxis, the ones who have already the license to run a taxi protest, block the traffic.
So it's a question of deeply rooted privileges of many categories which have to be absolutely and courageously overcome.
The reason why foreign investments in Italy are poor can be explained more or less clearly. Anyhow, it is a problem. We really don't attract enough foreign business in Italy, perhaps there are too many limitations or too many constraints. And this is a question which is being discussed very much in our government, in our parliament. It is true. It is true.
At the same time, I would say that although we cannot be satisfied with the level of our competitivity (sic), there are many good performances in various sectors. For instance, our export in the United States is going very well, in spite of a such strong euro and weak dollar, because in some sectors we reached a level of excellency which means also competitivity on the international market.
So, many problems, no easy optimism, but not even sensationalist pictures, as probably is the article today, are really founded.
GARDNER: I think -- Ken, do you have a question?
QUESTIONER: Ken Lipper, Cushman & Wakefield. Following up on Bruce's question, what are the specific priorities that this government has for economic reform, fiscal reform, pension reform? And does a left-of-center party have the political capability and constituency to carry that forward?
NAPOLITANO: Well, this is perhaps a too specific political question for an answer of mine.
Anyhow, the government program is concentrated on some points: more investment in research and innovation; a modernization of our formation, education and high information system, including universities. And we want to give more incentives to private firms, reducing the tax weight, the tax burden. And up to a certain point, it has already been decided by the government. Now there is a strong pressure by trade unions because wages are poor, but are poor in real terms, because more or less 40 percent of the salary, of the wage, is taken by the tax system. And -- (inaudible) -- to have more competitive firms and also to have more productivity, we have to reduce the tax burden on profits and on wages. So there are many other things which are being pursued.
As regards to the aged persons and the pension system, well, I would quote it as a very evident example on what I was saying before. There is a terrible resistance of a part of the industrial workers who have very favorable conditions for their pension system, and their opposition, the opposition of the trade unions to raise the -- you say the pension age?
NAPOLITANO: The pension --
GARDNER: Retirement age.
NAPOLITANO: Yeah. It is very strong for these reasons.
GARDNER: The retirement age is now 57 -- 57.
NAPOLITANO: No, no.
NAPOLITANO: Fifty-eight if you have 35 years of contribution, you paid for your pension; otherwise it is 60.
NAPOLITANO: By the way, it should be raised, but the opposition is very strong. So I think that we should liberate the Italian economy from these constraints. And it is a long-term task -- well, let's say a mid to long-term task.
But one thing is very important, and I want to emphasize it. You need continuity in some choices, in some public choices. They cannot change every -- I don't say every year, but every five years. Also if the government change, the parliamentary majority change, we should have continuity in some reforms, which request time, which require time. You cannot -- if you decide reform for the pension system or for the university system or for defenses, you have -- you need 10-15 years of continuity, and that means that you must have a less conflictual political climate, whatever is the -- (word inaudible) -- in power.
GARDNER: Well, ladies and gentlemen, I wish we could go on because we've -- we're getting into some exciting issues here, but I'm told that the rule of the council is we must conclude on time. We've allowed a little extra five minutes because we started late, but allow me to end in this way.
When I was ambassador in Italy, I went over there and Henry Kissinger said, "Dick, this is a terrible mistake. Italy is going down the tubes." Somebody used that phrase. When I arrived, you will remember there was the Red Brigades, there was deep political tension, there was 22 percent inflation; people were hopeless about the situation. And yet Italy survived and has actually progress in so many ways despite its problems. When we talk about political polarization, that should seem quite familiar to Americans. We have our problems here. We have problems reforming our entitlement programs. We're not entirely satisfied with the way we go about our primary system of electing and choosing a president. So we can understand the problems of Italian democracy.
But one thing, ladies and gentlemen, gives us confidence about Italy's future, that it had the good judgment to choose Giorgio Napolitano, a man you see of such integrity. His answers were absolutely honest and direct, a great gentleman, a great European, as well as a great Italian. Thank you so much for being with us.
NAPOLITANO: Thank you. It's not enough. (Laughter.) I think we can bet on Italy on its best traditions and on its animal spirits.
GARDNER: Animal spirits. (Laughs.)
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