MNI INTERVIEW: Italy Euro Exit Seen Last Resort - 5 Star Spox

--Italy's Five Star Aim For Euro 'Fix' Via Treaty Amendments

By Silvia Marchetti

     ROME (MNI) - An Italian referendum on an exit from the euro would only be

held as a last resort if single currency reform efforts failed, a senior

official from the 5 Star Movement told Market News in an exclusive interview.

     Party spokesman Danilo Toninelli said 5 Star have never been in favour of

an unqualified euro exit referendum, preferring to 'fix' the euro by amending

existing European treaties.

     If all attempts at treaty revision and at reforming budgetary measures

fail, then a referendum on exiting the euro would "be plausible, but let's hope

we never get to that point," Toninelli said. 

     "Our program is the same as the 2014 European Parliament election one: we

believe the euro needs to be adjusted through a revision of all treaties, mainly

the Maastricht agreement and the fiscal compact on debt," he said. 

     --EMU REFORM NEEDED

     His party believes that more pro-growth and investment-friendly policies

are needed across the EU, and that flexibility of the rules should be permanent

rather than a one-off "gift from Brussels to pleading countries". 

     Toninelli is confident that if the singe currency is fixed to support

fluctuating economic cycles and struggling countries are given much needed

fiscal leeway, then "the scenario will change". 

     Five Star aim to reform euro governance because "the fixed (internal)

exchange rate, topped with fiscal orthodoxy, are a lethal mix able to trigger

market instability, a rise in the spread between German and Italian bonds, and

therefore more public debt," he warned. 

     "Having a strong currency like the euro, at a fixed exchange rate like

today, only favours economically powerful countries such as Germany to the

detriment of the poorer southern ones," Toninelli noted.

     In order to give Europe a restyle, more burden-sharing is needed and

according to Toninelli, euro-bonds are a good tool. 

     "Europe is not just about sharing all the advantages and bright things, but

also the negative sides," he said. 

     The 5 Star Movement, currently sitting just shy of 30% in the polls, would

likely need to team up with other parties after the March elections if they fail

to secure the necessary 40% of votes required to govern outright. 

     --UNLIKELY SCEPTICS

     Analysts are sceptical on how durable these market-friendly comments from 5

Star are. 

     Giovanni Orsina, director at the Rome-based LUISS University, argued that

it is very unlikely that 5 Star could ever seriously adopt any anti-European

initiative were it to rise to power.

     "Five Star are structurally ambiguous and never do what they say. In any

case, they would not have either the will nor the power to attack Europe in any

kind of scenario," he said. 

     Orsina noted that the movement has always been vague in its Europe stance,

helping lure both hard core euro-sceptics and voters critical of Europe, but

with a mellower attitude.

     "The sad truth is, Europe is the real absentee from this electoral

campaign," he added. 

     "All parties talk about it, but no one has a clear vision of how the

European integration project should progress. None are totally against nor

pro-Europe. Sure, all want to change Europe, but the goal appears to be beyond

Italy's political establishment," said Orsina. 

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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