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REPEAT: MNI I'VIEW: Italy Euro Exit Seen Last Resort: 5 Star

MNI (London)
Repeats Story Initially Transmitted at 10:25 GMT Jan 16/05:25 EST Jan 16
--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
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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