Obama: “Austerity measures contributed to slower growth in Europe”
October 18, 2016
“The following article appear on “La Repubblica” on October 18, 2016
by Federico Rampini
Exclusive interview with U.S. President: “Italy is at the forefront of the refugee crisis. But a small number of nations on the frontlines can’t bear this heavy burden alone”. On terrorism: “Italy is a vital member of our coalition. I’m confident that we will win and ISIS will lose”. On TTIP and free market: “It’s simply not possible to withdraw and pull up the drawbridge. Protectionism only makes our economies weaker”
At the beginning of your first mandate, both the US and European economies were in a deep recession. Since then the US economy has enjoyed 7 years of growth, whereas Europe still suffers from low growth and high unemployment. Is it time to re-evaluate the role of fiscal policy, public investment, and how it could restore economic growth? In other terms, have austerity policies failed?
“First of all, I want to say how much Michelle and I are looking forward to hosting Prime Minister Renzi and Mrs. Landini. Italy has long been one of America’s closest and strongest allies. The friendship between our peoples runs deep, especially among millions of proud Italian Americans who make remarkable contributions to our country every day. This visit will be an opportunity to reciprocate the hospitality that Matteo, Agnese and the Italian people have shown to our family during our visits to Italy. It will also be a chance for me to thank Matteo for his strong partnership across a range of issues, including our shared commitment to broad and inclusive growth that creates jobs in both our countries and across Europe.
“I think that the experience of the United States over the past eight years shows the wisdom of our approach. Shortly after I took office, we passed the Recovery Act to stimulate the economy. We moved quickly to rescue our auto industry, stabilize our banks, invest in infrastructure, jumpstart loans to small businesses and help families stay in their homes. The results are clear. Our businesses have created more than 15 million new jobs. Our unemployment rate has been cut in half. We’ve slashed our deficits. Workers are finally seeing their wages begin to rise. Incomes have risen, and poverty rates have fallen. We still have a lot of work to do to help workers and families get ahead, but we’re moving in the right direction.
“Some countries took a different approach. As I’ve said before, I do believe that austerity measures have contributed to slower growth in Europe. In some countries, we’ve seen years of stagnation, which has fed into the economic frustrations and anxieties we see across the continent, especially among young people who are more likely to be unemployed. That’s why I think the vision and ambitious reforms that Prime Minister Renzi is pursuing are so important. He knows that countries like Italy have to move forward with reforms to boost productivity, spur private investment and unleash innovation. But even as countries move forward with reforms that will make their economies sustainable in the long-term, he recognizes that they need space to make the investments necessary to support growth and jobs and expand opportunity. Matteo has the right approach, and it’s beginning to show results. The Italian economy and labor market have shown signs of growth. Matteo knows well that progress needs to come even faster, and a key topic of our discussions will be how our countries can continue to work together to create more growth and jobs on both sides of the Atlantic.”
The “Trump phenomenon” in the US was foreshadowed by populistic, nationalistic movements in Europe. What is your suggestion to your European allies, on how to cope with the post-Brexit scenario? How to respond to movements that want to insulate Europe, build walls, reduce immigration, limit our exposure to international trade?
“There’s no question that, across our countries, the same forces of globalization that have delivered so much economic and human progress over the decades are also posing political, economic and cultural challenges. Many people feel that they are being disadvantaged by trade and immigration. We saw this in the vote in the UK to leave the EU. We see it in the rise of populist movements, on both the left and the right. Across the continent, we see some questioning the very concept of European integration and suggesting that countries would be better off by going their own way.
“At moments like this, even as we acknowledge the very real challenges that we face, it’s important to remember how much our countries and our daily lives benefit from the forces of integration. Our integrated global economy, including trade, has helped make life better for billions of people around the world. Extreme poverty has been dramatically reduced. Thanks to international collaborations in science and health and technology, people are living longer and have more opportunity than ever before. The EU remains one of the greatest political and economic achievements in modern times. No EU country has raised arms against another. Families in Africa and the Middle East risk their lives to give their children the blessings and quality of life that Europeans enjoy, which should never be taken for granted.
“Our challenge, therefore, is to make sure that the benefits of integration are more broadly shared and that any economic, political and cultural disruptions are addressed squarely. That requires economic policies that are inclusive and truly invest in our people with education, skills and training that helps boost wages and reduce inequality. It requires trade that protects workers and the environment. It requires that we hold fast to our values and traditions as pluralistic and diverse societies; that we reject a politics of “us” versus “them” that tries to scapegoat immigrants or minorities. And in Europe, it requires the kind of vision that leaders like Prime Minister Renzi have put forward—a Europe that moves forward, not back, with an emphasis on growth that creates jobs and opportunity, especially for young people”.
On both sides of the Atlantic, TTIP negotiations have stalled. Protectionism is rising everywhere. American objections to free-trade are very familiar to you, but the European perspective is slightly different: many of our citizens, even in countries like Germany that have enjoyed huge trade surpluses, believe that a new treaty with the US would lower the protection of our consumers, our workers, our health. In the eyes of many Europeans, your country has become a symbol of an unfettered capitalism where multinationals dictate the rules. What is your answer to these European preoccupations?
“Yes, the politics around trade are difficult across our countries. But history shows that free markets and capitalism are perhaps the greatest force for creating opportunity, sparking innovation and raising living standards. We saw it in western Europe in the decades after World War II. We’ve seen it in central and eastern Europe since the end of the Cold War. We’ve seen it around the world, from the Americas to Africa to Asia. At the same time, we’ve also seen how globalization can weaken the position of workers, make it harder to earn a decent wage, and cause manufacturing jobs to move to countries with cheaper labor costs. And I’ve warned against a soulless capitalism that only benefits the few at the top and that contributes to inequality and a bigger gap between rich and poor.
“In our global economy where so much of our prosperity depends on trade between our countries, it’s simply not possible to withdraw and pull up the drawbridge. Protectionism only makes our economies weaker, hurting all of us, especially our workers. Instead, we have to learn from the past and do trade the right way so that the global economy is working better for all our people, not just the few at the top. Entrepreneurs need the support to help turn their ideas into a business. We need strong safety nets to protect people in times of hardship. And we need to keep working to curb the excesses of capitalism with strong standards for banking and taxation, and greater transparency, to help prevent the repeated crises that threaten our shared prosperity.
“We also need high-standard trade agreements like the Trans-Atlantic Trade and Investment Partnership. Even as trade between the United States and the EU supports around 13 million jobs across our countries, a host of tariffs and different regulations, rules and standards stand in the way of even greater trade, investment and job creation. By eliminating tariffs and bridging differences in regulations, we’ll make it easier to trade, especially for our small and medium-sized businesses. T-TIP will not lower standards. On the contrary, it will raise standards to better protect workers, better protect the environment, better protect consumers and ensure a free an open Internet, which is essential for our digital economies. For all these reasons, the United States remains committed to concluding negotiations on T-TIP, and that will take political resolve in all our countries.
Are we winning the war against Isis in Iraq and Syria? And what about the “other” war against Isis, the prevention of terrorist attacks within our own countries?
“Our coalition continues to be relentless against ISIL (ISIS, ndr) on every front. Coalition airstrikes continue to hammer ISIL targets. We continue to take out senior ISIL leaders and commanders so they can never threaten us again. We continue to hit their oil infrastructure and financial networks, depriving them of money to fund their terror. On the ground in Iraq, ISIL has lost more than half of the populated territory it once held, and Iraqi forces have begun operations to liberate Mosul. ISIL has not had a major successful operation in either Iraq or Syria in more than a year. In short, ISIL remains on the defensive, our coalition is on the offensive, and even though this will continue to be a very difficult fight, I’m confident that we will win and ISIL will lose.
“Under Prime Minister Renzi’s leadership, Italy is a vital member of our coalition. Italy is one of the largest contributors of trainers and advisers on the ground in Iraq. Italian Carabinieri forces are training thousands of Iraqi police to help stabilize Iraqi cities and towns as they are liberated from ISIL. In addition, Italy is an indispensable partner with regard to Libya. Italian diplomacy played an important role in the process leading to the formation of the Libyan Government of National Accord. The United States and Italy are working to help the Libyan government strengthen its capabilities as it pushes ISIL forces back and secures more of their country.
“That said, even as ISIL continues to lose ground in Iraq, Syria and Libya, it still has the ability to conduct or inspire attacks, as we’ve seen across the Middle East, North Africa, in the United States and in Europe. Preventing lone individuals and small cells of terrorists from killing innocent people in our countries remains one of our most difficult challenges. Even as each of our countries work to thwart attacks at home, we have to do more together, including sharing information and intelligence, stopping foreign terrorist fighters from traveling and strengthening border security”.
Italy is on the forefront of the refugee crisis in the Mediterranean. At times it seems that our country is left almost alone, to face this emergency. How do you assess the importance of European solidarity on this issue?
“Italy is clearly at the forefront of the refugee crisis, which is a humanitarian catastrophe and a test of our common humanity. The images of so many desperate migrants—men, women and children—packed into small rafts and drowning in the Mediterranean have been beyond heartbreaking. To its credit, Italy continues to play a leadership role. As the commander of the EU naval force in the Mediterranean, Italy and its partners have rescued and saved the lives of hundreds of thousands of migrants. Prime Minister Renzi has been an eloquent voice for a compassionate and coordinated response to this crisis, including the need for assistance to African countries where so many of these migrants originate. Many Italians have shown their generosity by welcoming refugees into their communities.
“But as I said at the refugee summit that I convened at the United Nations last month, a small number of nations on the frontlines can’t bear this heavy burden alone. That’s why NATO agreed this summer to increase our support to EU naval operations in the Mediterranean. It’s why the United States believes the deal between the EU and Turkey is an important way to share the costs of this crisis and ensure a coordinated approach that must uphold the human rights of migrants and ensure a migration policy that is orderly and humane. And it’s why the United States will continue to do our part as the largest single donor of humanitarian aid around the world, including to refugees, and with our new commitment to welcome and resettle 110,000 refugees over the coming twelve months.
Given the magnitude of this crisis, the entire world has to do more. Last month’s refugee summit was an important step forward. More than 50 nations and organizations have increased our contributions to humanitarian organizations and U.N. appeals this year by some $4.5 billion. Collectively, our nations are roughly doubling the number of refugees that we admit to our countries to more than 360,000 this year. We’ll help more than one million children who are refugees get an education, and we’ll help one million refugees get training, new skills or find a job. Still, we need even more nations to donate more assistance and accept more refugees. And we need to reaffirm our commitment to diplomacy, development and the protection of human rights, thereby helping end the conflicts, poverty and injustice causing so many people to flee their homes. In this urgent work, we’re grateful for the strong partnership of our Italian friends and allies”.