Monti, in Berlin, Calls for Growth Policies in Europe

Monti, in Berlin, Calls for Growth Policies in Europe

BERLIN — Italy’s technocratic prime minister, Mario Monti, arrived in Germany on Wednesday with a sharp message for Chancellor Angela Merkel that austerity alone was not the answer to Europe’s sovereign debt crisis, and that the political and economic situation in Italy could deteriorate rapidly without more assistance from European institutions.

In an interview with the German daily newspaper Die Welt, published the morning he was to meet with Mrs. Merkel, Mr. Monti said Italian sacrifices alone would not pull the country out of its debt problems. Without evidence of concrete assistance, “a protest against Europe will develop in Italy, also against Germany, which is viewed as the ringleader of E.U. intolerance, and against the European Central Bank,” Mr. Monti said, using the initials for the European Union.

“I cannot have success with my policies if the E.U.’s policies don’t change,” Mr. Monti said, pleading for help in particular in bringing down interest rates. Otherwise economic discontent could force Italy to “flee into the arms of populists,” he said.

Germany’s solution to the crisis has been to push for structural changes in the economies of deeply indebted countries like Greece, Spain and Italy, along with austerity plans aiming for balanced budgets. But the resulting economic dislocation has been painful, and unemployment has risen rapidly even as government spending has been cut. Mass demonstrations have broken out in Greece and Spain, and clashes between protesters and the police have rocked Athens and other Greek cities.

While Mr. Monti’s comments may have been a tactical move intended to soothe anger among his constituents at home, they also neatly encapsulated the rising anti-German sentiment among the unemployed and pensioners in other countries, who have seen their benefits reduced.

“The basic problem is that Germany still doesn’t treat the euro problem as though it is a collective problem,” said Sergio Romano, a political commentator for the Milan daily newspaper Corriere della Sera. “They are moving in that direction; they are contemplating the loss of further sovereignty in the euro zone. And Mr. Monti is telling Mrs. Merkel to speed it up.”

Although Mrs. Merkel pushed to have Mr. Monti replace his predecessor, Prime Minister Silvio Berlusconi, she may live to regret her move. His more interventionist views on a range of issues, including more aggressive action by the European Central Bank and the issuance of collective debt — known as euro bonds — coincide far more neatly with those of President Nicolas Sarkozy of France, giving Mr. Sarkozy more leverage in his negotiations with Mrs. Merkel.

At a news conference after the meeting here on Wednesday between Mr. Monti and Mrs. Merkel, she seemed to acknowledge Mr. Monti’s plea, agreeing that European leaders would have to look for ways to spur growth and job creation. But she did not endorse new stimulus measures that would require greater government spending.

Mrs. Merkel may have been speaking with an eye on the home front as well, amid signs on Wednesday that the weakness of the European economy was beginning to drag down Germany, too. Government estimates said Wednesday that the German economy contracted by 0.25 percent in the fourth quarter of 2011 compared with the previous quarter, raising the likelihood that stagnation could turn into outright recession.

But the report on German growth illustrated the strengths as well as the weaknesses of Europe’s largest economy. Germany’s gross domestic product grew at a healthy 3 percent clip in 2011, steadily reducing unemployment even as joblessness rose in many other countries.

“I don’t think that the fourth quarter result is going to change anyone’s mind in Germany,” said Sebastian Dullien, an economist and senior policy fellow at the European Council on Foreign Relations. “There won’t be significant pressure on the German government to change their stance very soon.”

In the meantime, governments continue to follow Berlin’s prescription for cutting spending and raising taxes. On Wednesday, Spain’s Parliament approved the new center-right government’s first package of austerity measures, worth about $19 billion and devised to put the country back on track to meet its budget deficit targets.