Local view for "http://purl.org/linkedpolitics/eu/plenary/2005-06-08-Speech-3-293"
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"en.20050608.21.3-293"2
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".
Mr President, I do not know why we are having this debate. Mr Karas acknowledges that the Stability Pact relies on Member States disciplining themselves. He needs to go a step further in deducing that, for that very reason, the pact cannot work; it never could work. So I regret that his well-intentioned attempts to try and make it work by tightening definitions will be in vain.
Rather than pretending that fiscal discipline can be achieved, we should consider the consequences when it is not achieved. Let me focus on Italy, where the deficit has now been shown to have been above the 3% margin for several years; debt is 106% of GDP; inflation is making the economy increasingly uncompetitive and economic growth is negative. The real danger here is that these conditions will culminate in a credible threat from Italy to reissue its own national currency, enabling it to devalue and thereby regain competitiveness without painful and prolonged deflation. Such an action would have serious Argentina-style results for Italy but could, nevertheless, be seen as the best course of action.
But a decision by Italy to re-issue the lira would undermine confidence in the ability of the euro to survive as a multinational currency. Other EU countries would then be faced with the prospect of providing the Italian Government with large-scale financial assistance to persuade it to stay with the euro."@en1
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