ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN:
Let’s go to Rome now and to Lucio Malan, who is Secretary to the Italian Senate, supporter of the Italian Prime Minister, Silvio Berlusconi, a very good morning to you Mr Malan. The markets wonder, the rest of Europe wonders about how serious Italy is about dealing with its huge debts.

LUCIO MALAN:
We are dealing very seriously. Already in August we passed several measures in order to improve our financial situation and to go to a balanced budget by 2013 and more measures have been passed in these days. We still have an aggregate debt that is very much like France, much better than UK and just 10% worse than Germany so the aggregate debt is very good data for us and that matters.

DERMOT MURNAGHAN:
But if you say that why don’t the markets believe you? Why are they pushing up Italy’s borrowing costs?

LUCIO MALAN:
I think that it is a problem that is involving all Europe because of Greece and of course the countries that suffer more from such a difficult situation in Europe are those with a bigger public debt and therefore Italy and we don’t even need to mention Greece.

DERMOT MURNAGHAN:
But isn’t a lot of the problem Silvio Berlusconi himself went to the G20 there and didn’t really seem to be taking the problem seriously and you still don’t have a credible debt reduction plan that you are actually implementing.

LUCIO MALAN:
Actually we are implementing, we have cut 60 billion of expenses and we are about to have a balanced budget and we are doing more so we are working on it. We will work on it, of course we need, everybody needs more quiet environment, the environment for euro in general is very difficult and in the old times there would have been devaluation of weaker countries and in these times the problem is reflected all on the interest rates of the public debt.

DERMOT MURNAGHAN:
With all his personal problems surrounding him, how focused is the Prime Minister on this issue?

LUCIO MALAN:
Well the Prime Minister is very much focused on this issue. He went to the international meetings and he is the one who is in charge of taking these measures, even before the minister of the economy.

DERMOT MURNAGHAN:
Are you convinced he is the best man for the job?

LUCIO MALAN:
Well he has been elected for the job and therefore in a democracy it means he is the best man for the job.

DERMOT MURNAGHAN:
Do you think he can stay in the job though, given the nature of the coalition and the rumblings within it?

LUCIO MALAN:
I think that as long as the majority holds, as long as we have a majority in both houses, he is the man who has to do the job and if he doesn’t of course he will have to resign and something else will come but as long as he has the majority in both houses, he has the right and moral duty to continue to run the country.

DERMOT MURNAGHAN:
Is it Italy’s intention to stay within the eurozone come what may? Much more discussion now as you are aware of as well that Greece may have to go and then of course the spotlight would turn on countries like your own and all discussions about a eurozone core centring on Germany. Italy still wants to stay part of that?

LUCIO MALAN:
Italy wants to be part of euro, we were among the most enthusiastic supporters of the euro. Of course we need management of euro that doesn’t just agrees with the interests of those who stay on the shores of the wide river but also to the many other countries that have joined the euro and of course, as long as the internal rules are made to save for instance French banks damaging Italian banks who didn’t suffer and never needed help from the government, of course that doesn’t help our European feelings.

DERMOT MURNAGHAN:
I see, well if it comes to, as many people are talking about, deeper and deeper fiscal and economic integration with a much more Germanic model when it comes to public spending and fiscal rectitude, Italy could stick with that?

LUCIO MALAN:
Well of course if you are speaking about German, the Deutschmark that includes other countries, of course this is not the euro that we are looking for, it is not the Europe we are looking for. I think it must be something which is really European, something that listens to the interests of all the countries who are members of the euro area otherwise certainly the Italian economy is much different from the German economy and we are very much based on the medium and little sized companies and this is completely different from Germany. This is why we are very good partners for each other but it is why not all that is good for Germany is good for Italy.

DERMOT MURNAGHAN:
That’s the problem though isn’t it, those small and medium sized businesses, with lower productivity rates, much lower productivity rates than the Germans and Italy is a nation with, as we’ve discussed, much higher borrowing levels.

LUCIO MALAN:
Well of course that doesn’t help and these much higher borrowing … you mean the interest rates or do you mean that companies are borrowing more money?

DERMOT MURNAGHAN:
The size, the amount you borrowed.

LUCIO MALAN:
Ah, well we are borrowing a lot of money for the public debt but as I told you, the aggregate debt and when we speak about borrowing money, the aggregate debt is the relevant figure. The aggregate debt of Italy is exactly like France, 230% of the GNP and the UK has 270 and Germany has 200 so I don’t see that we are so unbalanced with the other countries, we are even better than others. This is not the problem, I think there are other problems. Of course we have to remove obstacles, we have to deregulate something in our internal economy but the Italian economy is still strong and very responsive. You are right, the little and medium sized companies have some problems but that means that they are much more reactive to the new necessities of the market and this is why we feel relatively better in some times of crisis.

DERMOT MURNAGHAN:
Okay, Mr Malan, thank you very much indeed, Lucio Malan there.

LUCIO MALAN:
Thank you.