German Finance Minister, Wolfgang Schaueble smiles after receiving the Charlemagne Prize
REUTERS
Italy must implement the reforms set out by Prime Minister Mario Monti to avoid becoming the next victim of euro zone contagion after the bailout for Spain's banks, German Finance Minister Wolfgang Schaeuble told an Italian daily, reports Reuters.
Other euro zone countries including Spain and France must also stick to the reform path, he said, while Greece would have to do so whether it stays in the euro or not.
"If Italy continues along Monti's path there will be no risks," the German minister was quoted as saying in an interview with La Stampa on Wednesday.
"Spain too is on the right path. It does not need an aid programme. It has a specific problem with its banking sector and I am sure it will solve it."
Monti's austerity drive and a radical pension reform have been welcomed by investors but support has been waning after Rome failed to balance tax hikes with bold pro-growth reforms.
If the economy does not start to grow after a decade of stagnation, Italy will face mounting difficulties in cutting its debt, now at 120 percent of gross domestic product and second only to Greece's mountainous liabilities in the euro zone.
Schaeuble said he did not agree with an Italian suggestion that certain public investments be excluded when calculating a country's deficit.
"I would not advise to solve certain problems by changing certain statistics. It did not work well for some countries when they joined the European Monetary Union. We will not repeat the same mistake," he said.
Schaeuble said he did not agree it was inevitable that Greece would leave the euro after a general election on June 17 that was called after a inconclusive poll last month left the country unable to form a government.
"Greece must carry out significant structural adjustments to sort out its lack of competitiveness and its weak public finances. There is no other way," said the minister.
"If Greece were to leave the euro, this would not change its need to carry out reforms."
In a separate interview with German weekly 'Stern' due to be published on Thursday, Schaeuble said the Greek election did not pose a threat to the euro and reiterated that it was for Athens to decide whether to stay in the common currency.
"We do not want - and legally we are not even able - to push anybody out of the euro zone. Those are the European rules. Besides, the disadvantages would be considerable. We advise the Greeks not to quit, we would regret that," Schaeuble said.
"But in the final analysis it is their (the Greeks') decision," he added.