 Before I have the pleasure to introduce the Prime Minister of Italy, Mario Monti, I would like to acknowledge the heads of state, the heads of government, the Royal Highnesses being with us at this opening session. And I also would like to welcome, particularly our co-chairs, Frederico Curado, Mouta Kent, Uget Label, Andrew Leveris, Nishida-san, and Axel Weibo. Please welcome those personalities. Prime Minister, it is a great privilege to introduce a long-standing friend of the World Economic Forum for over 20 years. An accomplished economist, a university president, and a leader with strong European credentials ranging from his time as a member of the European Commission to Minister of Finance and Economy and now as Prime Minister of Italy. It's a great honor that Mario Monti is able to join us today. Not surprisingly, Prime Minister Monti's strong leadership, his calm and measured character, are widely admired and respected in Europe and internationally as an example to follow. When Prime Minister Monti assumed office in 2011 with Italy on the brink of financial dissolution, his government bravely began implementing a significant, a significant series of critical structural reforms to put the country on a more fiscally responsible and more competitive path. Thank to the Prime Minister's vision and discipline, financial markets began expressing a renewed face in Italy and Europe again. Prime Minister Monti, we are honored by your presence here today. I invite you now to share with us your views at this critical juncture in the history of your country and to share with us your roadmap for Europe's future. Mr. Prime Minister. Mr. Bundespräsident Maurer, President Schwab, Excellencies, Ladies and Gentlemen, it is a great privilege for me to take the floor in this plenary session and I want to thank Professor Schwab for giving Italy a place of honor in this year's program. I take this not as a gesture of kindness for a soon outgoing Prime Minister, but rather as a sign of interest for the policies of fiscal responsibility and structural reforms Italy has been following over the past year and for the choices it will have to make to shape up its future. First, let me say that I feel the circumstances in which I'm addressing you today are very different from the ones of 14 months ago when I took office. When I had my first international meetings at the time, I used to remember the words that Prime Minister Alcide de Gasperi, the leader of Italy's post-war reconstruction used when he took the floor at the Paris Peace Conference after the Second World War. I quote, I feel that everything but your personal sympathy is against me. End of the quote. Today the atmosphere around Italy has changed. I do not only feel your and your personal sympathy. I can feel that Italy has gained back respect and confidence in its ability to bounce back. I see a very concrete interest of businesses and investors for the opportunities my country can offer for economic growth and innovation. I could capture that earlier today in my dialogue here at the World Economic Forum with the investors community. I think this change is a reward for the action taken by government with the support of the parliament. Most of all, it must be a reward for all Italian citizens which over the past year understood the need for change. With their work, their effort, their determination to stand hardships, they helped the country turn its back to the past and come out of the crisis stronger. I want here today to pay a tribute to Italian citizens, to their resilience, to their maturity. And I want Italian citizens to be aware of the fact that their contribution to through a difficult time has not been negligible also for the improvement of the conditions and of the perceptions of the European Union and of the Eurozone. Italy and the European Union are really two parts of the same thing and I never once used over the last 14 months the argument vis-à-vis my fellow citizens asking for their sacrifices, sorry, but Europe asks us to do so. I always said and I made a point of this, we must do this in our interest and in the interest of future generations of Italian. And by the way, wise Europe also recommends us to do so. Turning to the title of the inaugural address of this year's World Economic Forum, leading against the odds, let me say that I never doubted that taking the reign of a government in the midst of a financial turmoil and without a genuine political majority was going to be an uphill struggle. I have governed with the strong conviction that leadership is the opposite of short-termism. Short-termism unfortunately exists today both in national politics worldwide, I'm afraid, and in European politics. Short-termism means that Italy in the past decade did not use the opportunity of the membership of the Eurozone to do the reforms and reach a lower debt to GDP ratio. Italy wasted a significant primary surplus and lived on the illusion that we could promise change without ever delivering any real reforms. This is what one can describe as promising reforms and ending up with taxes and with debt and with a sovereign debt crisis. Italy had failed to take on the challenges of globalization, demographic change and technological innovation. It choose the policy of the status quo and procrastination. It choose the illusion that when the world is changing one can stay the same. The costs of inaction were dumped on our children and our grandchildren until the moment of truth arrived. We tried hard over this year to reverse this way of doing policy. Italy implemented in 12 months what the IMF and I wish to recognize here and to pay tribute to her for her leadership, Christine Lagarde, called an ambitious and wide-ranging agenda which is a model for fiscal stabilization and growth enhancing reforms. We worked to tackle deeply rooted structural weaknesses. We did not go for the low-hanging fruits, but we aimed for the big targets. For example, in the area of liberalization, we went and introduced the separation of the gas transmission from the gas distribution or the abolition of the cozy interlocking directorates that hinder competition in the financial sector. We introduced more freedom in the retail market and created more jobs opportunities in the legal and other professions. More, much more needs to be done for sure, but the progress is not negligible. The OECD assessed that these reforms made the Italian product market as open as the EU average today despite remaining obstacles at local and regional level. These reforms are expected to bring 4% additional growth over a decade, 0.4% each year. This is macroeconomically relevant. Structural reforms are important because they lay the foundation for future growth, but also because they bring more equity and more justice to the economy. The Bundespräsident underlined the word competition, the fact of competition, the virtues of competition. So much of the structural reforms that all our countries are embarked upon really boils down to enhancing competition, to reducing the advantages of the insiders relative to the disadvantages of those lying out in the cold, normally youth, normally unemployed and even more frequently youth unemployed. Unfortunately, short-termism also exists in European politics. I did see short-termism in the initial European response to the crisis. For instance, when we insisted that each member state had of course to clean up the mess in front of its own house and we failed, however, to recognize that the crisis had a systemic component. This slowness means the crisis ultimately became a crisis of confidence in the euro area's ability to solve its problems and in the euro itself. It was a hard but very challenging fight intellectually and politically, for example, to convince my colleagues, the head of governments of Nordic European countries, that of course one had to do its homework, as Italy was desperately doing, desperately but with hope of course, doing. But the moment that there is a market less than total faith in the euro and its integrity, as was the case one year ago, then of course it's not enough that each country does its own homework diligently, because there is a systemic component, a risk factor inherent in the euro itself. And of course it is only natural that that reflects more than proportionately in a heavy manner on those countries which, like my country, although recognized as being doing the right policies, have to bear on their shoulders a very high stock of debt because of inherited policies. So I think it was an important moment that I place on the timescale in June of last year when at the June European Council after tough but constructive discussions, the heads of state and governments agreed on a new approach to the handling of the crisis and for the better. And I want to praise the leadership of Mario Draghi in devising the LTRO and the outright monetary transactions program. Yet it is generally believed that if Italy had not promptly set itself on a credible path of discipline and reform, and if the European Council at the insistence of Italy in particular had not taken its important decisions on financial market stabilization, it would have been much harder for the European Central Bank to launch those programs. We see here the interaction between domestic policymaking, the shaping of EU policies at the political level, and the room for comfortable action in its full independence of the ECB. I also see short term is when we take too long to recognize that for structural reforms and fiscal consolidation to be successful, Europe has to act to sustain economic activity and tackle the growing public opinion resentment for job insecurity, loss of income, and increasing inequalities. The single market, the role of productive public investments, the need to balance fiscal consolidation and growth are now at the center of the EU agenda, thanks also to the Italian pressure. And I do hope that in two weeks European leaders will find once more the necessary leadership to agree on a pro-growth and fair new multi-annual financial framework, the seven-year budget of the European Union. Of course, leadership is better tested at times of adversity, but I think that it is possible also to lead against the odds. Policies that would appear deeply unpopular, inevitably unpopular to begin with, can win support if they are well simply explained and if they show that the reform effort will be evenly spread to avoid that specific groups in society feel they are being unfairly singled out. If my experience is anything to go by, the odds are against the reforms if a government does not have the vision or the strength to confront the requests of special interest groups or categories of the society. I saw corporatists and special interests at work this year to resist reforms. They prefer in the end to pay more taxes rather than accepting reforms that open up markets because this threatens entrenched positions. As the interests are and across the board break on reforms, sometimes their resistance is camouflaged by using old ideological cultures that are less and less relevant for today's challenges. Let's not be mistaken, vested corporatists' interests are a feature throughout the EU, not just Italy, and one that has become more powerful in recent years. After the successful launch 20 years ago, the Single Market project has lost pace and support. This is why over the past year I pushed again for speeding up the completion of the Single Market. On this, I agree with Prime Minister Cameron, as I agree that prosperity and growth have to be priority number one for Europe. I believe that we will succeed in making Europe more innovative, more suited to the challenges of globalization if we tackle this fight together. And I am confident that if there is to be a referendum one day, the UK citizens will decide to stay in the European Union and contribute to shape its future. I think the European Union does not need unwilling Europeans. We desperately need willing Europeans. And I think that there is an advantage in envisaging, like Prime Minister Cameron does, and I'm not commenting here other aspects of his speech on which I may agree less perhaps. But I think there is an advantage in the idea of eventually putting to the people the real question in a referendum, not marginal questions like, would you like to keep membership of the EU but accept this or that tiny change in a treaty? Of course the answer is no, as we have seen in many countries. But if you ask them the fundamental question, would you prefer UK citizens that the UK remains member of the European Union or that we leave the European Union? I don't know what the UK citizens will say, but I feel pretty confident that all the costs and benefits of this decision will come up, will become explicit and I think this will facilitate a decision in the interest of all Europeans. Let me conclude with some words about why I am confident about the future of Italy. Today, Italy is a very different country from one year ago. We made tough choices to put our public finances on a sustainable path. Italy will have a balanced budget in structural terms this year and will maintain a primary surplus of over 4% in the next years. We have given ourselves tough rules to make sure nothing can push Italy off track in the next years. We changed our constitution to introduce the rule of balanced budget and we are committed to respect the fiscal compact. We have reformed the pension system, which is now considered to be one of the most sustainable in the whole world. We cut public expenditures with two rounds of spending reviews, saving 11 billion euro this year. We have rebalanced the weight of taxes and expenditure cuts in the fiscal adjustment program. We have a program for the sale of real estate assets and of state-owned companies or shareholdings. The message is that the burden of reducing the debt cannot be achieved only through taxation. We have considerably stepped up to the dismay of some segments of the public opinion, but not the ones we care about. We have considerably stepped up the fight against tax evasion, the black economy and corruption. Italy has today at last a law against corruption, which I would like to see even strengthened in the future. We started to break down the relationship between politics and administration with, for example, strict standards of transparency for appointments to public positions such as in the health sector. It has been a long year of reforms, which I will not even list because you certainly caught the general sense of what we tried to do. We went, I think, a long way, but more has to be done. We knew this was going to be difficult and that the results would not be seen after only more than a year. I am confident in the future of Italy because I see signs that the tide is turning. The spread on 10-year bonds has gone down from 575 to 260 basis points. The trade balance shows a significant surplus. Capital and foreign direct investments are returning to Italy. Growth will resume in the second half of the year and I am confident, Professor Schwab, that in the next World Economic Forum Competitiveness Index, the ranking of Italy will improve significantly. This depends on us, not on you. The future of Italy lays on a steady basis. In the next months, Italy will not look backward or inward. Italy will continue to be a very active partner in Europe, but this requires action. This is why I have chosen to do something which I considered totally against my nature and which is most likely against my personal interest. I have decided to lead a civic society movement at the next general elections in one month because I see the need for a new form of politics beyond traditional old coalitions. I call on the vibrant forces of society, of which there are enormous strengths in Italy, to support an agenda of reforms. It's the challenge of making sure that merit and hard work are rewarded. It's the challenge of ensuring that opportunity is shared and accessible. This is the essence of my commitment, building a highly competitive social market economy in Italy and in Europe. It is an ambitious agenda, but I remember Professor Schwab's words that we all have here, I quote you, Klaus, tremendous social responsibilities. So it is an ambitious agenda, but we owe it to the people from our respective countries. I owe it to the Italian people, to the most fragile in the society, to those who pay the intolerable price of unemployment, our youth in particular, and of deprivation. They are, we should recognize this. They are largely the victims of governments which often have not been strong enough in confronting tax evasion, corruption, special interest groups, greedy manipulators in financial markets, rent seekers. They are the victim of politicians who often engage in electoral promises regardless of whether these are deliverable or not, or all too often they aggravate the crisis because intent as they are on domestic elections, they reject the call for the needed, greater policy coordination and instead feed nationalism and populism. Thank you very much for your attention. Mario, Prime Minister Monti, I think you put the shame, those people I remember last year when we were assembled here and who were very cynical at that time about Italy and how Italy could master its reform agenda and what significant progress has been made. Now, when I look at our competitiveness report, Italy scored 42 compared with Germany reaches a place 6. And I think you have taken some measures to improve the competitiveness quite substantially. You spoke also about short-termism. How long does it take, in your opinion, to be at the end of what you would call a reformed Italy? Is it the timeframe? Can you do it in two years, in three years, or would it take much longer? I am fortunate enough, Klaus, that I believe for each country reforms are a never-ending process, including Germany, as shown by the determination of the German leaders in continuing to reform the country. But your question is, of course, very significant because Italy has to make up for lost time in terms of structural reforms to achieve higher competition. The government that will begin to govern the country this spring will have five years, normally, of the legislature, and therefore I think we'll be able to act on a medium-term frame. However, I hope that whatever that government is, they will be able to keep the same spirit of urgency and emergency that we were forced to feel because we were on the brink of the catastrophe and therefore used in particular the first or the two first years of the legislature because that is really the time when you can afford higher political costs because the benefits will hopefully come later. I think it will be, well, two, three years, I think will be a long enough time to see the returns from the reforms undertaken already and the extra reforms which are needed and some of the reforms are really a quantum leap because, I mean, I said publicly already that I was impressed months ago in Italy while receiving the Emir of Qatar and I asked him, our country has invested in Italy already, but what are the reasons I asked in the plural why Qatar has not invested more in Italy in the past? He answered with one word, corruption. I must say I was a bit shocked also because it was not coming from the king of Norway and in those very weeks we were confronting parliamentary debates, pretty tough parliamentary debates on our already introduced bill to introduce an anti-corruption law and you see, I think that some improvement is still needed in that law which is now in force but there are areas where to make gigantic improvements is relatively easy. For other areas it will take more time. Prime Minister, it was a tough year for you. Can you, I will ask you, your personal question, can you share with us what was the most difficult moment for you and what was the most satisfying moment in those 15 months? The most satisfying moment is today with you here. And I'm very proud for my country that you invited Italy today here. The most difficult moment was not a financial moment, was a day I was, a Sunday I was at Camp David for the G8 and I had to leave precipitously to go to the funeral of a 14-year-old girl in southern Italy who had been the victim of an explosion whose nature was not yet clear. That was a terrible emotion and from there I had to fly to Emilia Romagna for the earthquake. So I assure you that leaving the rarified and stratospheric atmosphere of Camp David where, by the way, we had very important evening discussions with President Obama, Chancellor Merkel and President Hollande on the future of the Eurozone. And to go into those realities was a shock. I can't imagine. Prime Minister, I think it was very important that you came to honour us this evening and to present to you to us what you have done and also what is now known as the Accendamenti. I think there is not sufficient knowledge about the depths of the reforms you have undertaken. You are now confronting elections on the 24th and 25th of January and on behalf of all of you here in the room, I wish you the possibility, opportunity to continue on the path you have outlined to us this evening, all the best we needed for Italy, for Europe and for the world. Thank you. Thank you very much. Thank you. Thank you.