REPEAT: MNI SOURCES: Italy Leads Med Front For EMU Reform

Repeats Story Initially Transmitted at 07:30 GMT Jan 9/02:30 EST Jan 9

--Rome Summit For Med Nations To Outline Euro-Bloc Reform Aims

By Silvia Marchetti

     ROME (MNI) - Italy is rallying support for its ambitious eurozone

governance reform plan among Europe's southern periphery countries, a senior

government official exclusively told Market News.

     "On Wednesday, Rome will host a summit uniting leaders of other six

Mediterranean countries -- France, Spain, Portugal, Greece, Malta and Cyprus --

with the goal of creating a pro-growth front to accelerate the EU's restyling

process," the source close to premier Paolo Gentiloni said.

     The summit agenda will focus on shared southern challenges such as

immigration, but also on the need for a new, more lenient interpretation of

Brussels' orthodox fiscal rules that should incorporate flexibility over debt

reduction and bring in greater burden and risk sharing among member states.

     "I suppose we can call this the Mediterranean League, just like there is

the northern bloc and the Visegrad group, we also share a common vision for the

future based on more growth-oriented measures and investments," said the source.

     The Rome-led Med summit will be the fourth since 2014, when former premier

Matteo Renzi and current Greek prime minister Alexis Tsipras jointly launched

the initiative to strengthen the southern periphery's role on the European

stage.

     --PRE-ELECTION SPOTLIGHT

     This month's meeting, however, is particularly important, after the

European commission officially launched its December makeover of the EU

governance.

     It also puts Italy -- and particularly the current Rome government -- in

the spotlight in a critical moment.

     Despite Italy being in full election campaign mode as it heads towards the

March vote, it is crucial that the still incumbent government sends out an

important message to the rest of the eurozone that it intends to spearhead

change across the bloc by joining forces with its southern peers, the official

noted.

     "We know that the debate on Europe's reform challenge has just started and

that there are different stances among northern and southern members on this.

But it is no coincidence that Italy was the first country to issue its own

position paper with specific proposals before anyone else," the official said,

adding it would be unlikely that Germany and France give their contributions

before March.

     Italy's position paper was issued during the last European Council meeting,

held in December. As well as the formal position of EU finance minister and a

common budget, the paper proposes an "automatic" fiscal flexibility clause, an

anti-unemployment scheme and a rainy day fund to stave off future economic

crises that could rock the union.

     --CLEAR REFORM MESSAGE

     Rome is aiming to become the point of reference for all southern members by

bolstering its leadership credentials for the bloc. It might not be an easy

task, despite common problems such as high public debts and slower growth rates

in the region when compared to the rest of Europe.

     "It is important that the summit issues a succinct, clear joint communique

setting-out the Mediterranean bloc's priorities for Brussels. The more we agree

our positions, the higher our chances of winning on crucial fronts," argued the

official.

     The Med League could even take advantage of the "power void" stemming from

German delays in forming a new government.

     "We know that without the German political engine working properly it is

hard to implement any kind of reform of the eurozone, but if the south is one

step ahead with a set of concrete, shared views this can speed-up the debate,"

the official concluded.

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