 He's done a number of other things. He's published on a range of international relations issues and Italian issues. He was a visiting fellow at Brookings in Washington for quite a while and he was also the Rome contributor to the Economist Intelligence Unit and I recruited him to that job and I have to say the dozens of people across Europe who contributed during my time editing there, none was better than Ettore, a very fine mind and I look forward to his presentation. So many thanks Dan and thanks also for reminding me about this very useful cooperation we had in the past. I'm very honoured to have been invited to make this presentation. Our both institutes are strongly committed to advancing the European cause. We are part of the same network, Europe, a network of European minded institutes. So it's a great pleasure for me to be with you and to speak about the topic of common interest. This is a list of topics I will try to address in my presentation. I will first speak about the Italian government position on key issues related to the future of the European Union By Italian government I mean the current government headed by Paolo Gentiloni of a centre-left democratic party because we don't know at the moment which government will be in power after the next election due to next spring and even there is also an uncertainty the position that the Italian can take with regard to European issues with the new government. I will then focus on two main challenges Italy is facing, macroeconomic stabilisation and migration. These are key issues with the European Union and the relations with the European Union are very much shaped with the efforts that Italy is making to convince the Union to change its policy in these two policy sectors. So these are clearly central issues for the relations with the European Union. Then we discuss the potential allies that Italy can seek within the Union to advance its national interests with also a brief evaluation of the actual coalition building capacity of Italy within the European Union. And then time permitting describe the latest development in the political scene in particular position of main parties, public opinion trends and future scenario after the election in spring or next year. So the government stands on the future of the Union. I would say that the country, the government, the current government, again the centre-left government we supported also by some centre's forces has been in favour of most of the pro-integration plans that have been proposed in the last few years amongst by the Commission or also by some member states or group of member states. This includes in particular the completion of European Monetary Union, including in particular the banking union. The introduction new instruments of economic governments like also a separate or bigger budget for the Eurozone and also the establishment of finance minister of the Eurozone. Has been in favour of more integrated migration policies which is widely considered in the interest of course of Italy and also of European security and defence policy and particularly this new initiative concerning the permanent structure cooperation in defence. The government has published several documents to explain its position with regard to this policy section. I would say all those documents are very much pro-integration and in favour of introducing new instruments to allow the European Union to be more effective in these fields. However one also have to emphasise that the country has been, the government has been particularly the parties supporting the government, not to speak of the position party. It has been very critical of fiscal compact and there is also an ongoing campaign for a return to Maastricht, so to come back to more accommodating or less intrusive fiscal rules which by the way is promoted by Matteo Renzi, the former prime minister at the end of the Barati party which is the dominant party in the government. Also the government is strongly opposed to the efforts made by some government to introduce strict rules for banning activities because we will be considered very detrimental to Italy economy. We will come back on that later. There is also a question mark on the willingness and willingness of Italy to support and reform the new budget, in particular reform of the common agricultural policy. We are now, there will be of course a difficult negotiation on the next multi-year financial framework and at the moment I would say it's uncertain whether Italy will be in favour of reforming the new budget, although in principle it's in favour of increasing it. Concerning Brexit, I would say that Italy is broadly in agreement with the European Commission tough stance and stance also shared by many countries including Germany, because basically it's clearly interested in UK making substantial concession on not on free circulation movement would say the rights of EU citizens because there are a lot of Italian expatriates in UK, but also only financial arrangement because there is a certain concern about the repercussion of Brexit on new budget and the prospect that Italy can be forced to pay more or get less from new budget. I would also add that there is a general fear of the walls especially last year that the Brexit could trigger a spillover effect and then adopting a tough stance was considered to be a way of averting this risk. I would say that especially in some quarters Brexit tends to be seen as an opportunity to advance integration in some sector because for instance European defence where the UK has been able to accept a veto power. But that said I would say policy makers are also convinced that UK is a very important country and there is a need to involve it possibly by introducing special arrangements in the development of some policies including particularly defence policies. Then there is this emerging team of greater flexibility or differentiated integration. The government has repeatedly expressed itself in favour of introducing greater flexibility and there was also push by Prime Minister Gentiloni to have a document approved last March in Rome which could emphasise this notion of differentiated integration, making it possible for limited groups of countries to go ahead and preventing others from vetting the new integration plans. But of course this is coming up against a stronger position and the Italian government itself was forced to water down the declaration in Rome because of the opposition especially of the visitor group but in general Italy remains in favour of considering mechanism for introducing greater flexibility with the new union. In particular is in favour of a deepening and strengthening of the governance of the Eurozone which of course will have as a result to increase the gap between the Eurozone member states and the others. That said there is a traditional persistent fear that Italy can be excluded from the core group so that differentiated integration if promoted in particular by central and northern countries could lead to a marginalisation of Italy. So in a sense this position on differentiated integration is ambiguous to some extent because there is also this type of fear. So let me now move to the challenge. Starting with the economic challenges that the country is, there is a way to just introduce to you the key problem that the Italian is facing in two fields as I said, economic policy on one hand and migration on the other. And to see how then Italy is trying with much difficulty to get more solidarity, more support for the European Union to advance its interest in those fields. So if we look at the annual deficit figures it seems that there has been an improvement. The level of deficit is now lower than in several other countries in the European Union. And it's also projected to fall further in the coming years. That's also the projection on the IMF. So in this sense what could speak of an ongoing macroeconomic consolidation but the biggest problem remains as you can see the huge public debt. There has been no substantial reduction in the last few years despite the promises by the government and the government projection themselves. You can see the government cross-section compared with those of the IMF are widely considered to be too optimistic. So this will remain a key problem for Italy, constrain very much its room for action and also creating problems for its reputation within the European Union. And as a result also its capacity to advance its national interest to play a active role in coalition building. Of course the problem of debt is closely linked with the structure of difficulties. The detail is continued to experience with the economic growth. We have experienced as you know a double deep recession and even in the last three years the growth has been extremely low. This year it has for the first time really accelerated but it's not projected to accelerate further in the next year and it will probably remain considerably lower than compared with the EU average. So we continue to have this problem a very dynamic growth rate especially if it is compared with the average EU countries. Then the problem of the weaknesses of the banking system, as you can see the volume of non-performing loans remains very large. It's about 15% of the total outstanding loans and it amounts to about one fourth of the total non-performing loans in the EU. There has been a downward trend since 2016 last year but much uncertainty surrounds again still the outcome of the ongoing consolidation efforts. Then we can, in light of that, there are three major risk factors that are widely felt in Italy. One is associated with the end of quantitative easing, so the accommodating or expansionary policy of the European Central Bank, which could put additional pressure on public finances, a complicated effort to keep them under control. Then another risk, an exogenous one is the new global financial crisis, which, as you know, all major financial institutions do not rule out, is the disability in Italy could be exposed to this crisis much more than others and is widely seen as a weak link in Europe. So the repeat of the situation in 2011 essentially. Enter the crisis of the banking system as a result of a failure of the ongoing attempt at consolidation. So considering these challenges, which are central for Italy or crucial, what are then the problems we have with the EU? In terms of fiscal policy, there has been a constant search by Italy for greater fiscal flexibility from the European Union, which has constantly made some concessions to Italy, and then crisisized Italy for not being able to exploit effectively this greater fiscal space, but there remains still this request by the Italian government to have greater fiscal flexibility, and this will certainly continue in the future. Of course, this is leading to constant tensions with the European Union. And then there is the government, but particularly political, many political parties including those supporting the government have continued to express an easiness with the fiscal compact, and the two-packed, and the six-packed, the new routes introduced after Maastricht. And now a campaign has started, which is also headed by the former Prime Minister Renzi, which aimed at calling for a return to Maastricht, as I said. So to have the European Union concentrate only on the 3% requirement, renouncing these much more stringent routes introduced in the last few years. Concerning the Bank Regulation, there is a widespread resentment for the introduction of the bail-in rule, although, as you know, the Italian government, the Renzi government, accepted and approved the new regulation, and also Italy recently, to save a couple of banks, also were exempted from applying this rule, which was criticized by some commentators, of course. But the feeling is that the European Union allowed many countries to bail out their banks at the beginning of the crisis, to 2007, 2008, 2009, even after that, while with the introduction of this new bail-in rule, which again was formally approved by the Renzi government, Italy was not allowed to do that. And so it's taken as a sort of discrimination against Italy. That's a very popular argument being exploited by the populist party. There is, as I said, a strong opposition to stricter rules for banking activities. As you know, Germany is pushing other countries to be in favour of that, to introduce these new rules because there is the fear that this can even further erode the lending capacity of Italian banking, particularly I'm now speaking of the introduction of seedings on sovereign banks in banks' portfolio in exchange for the completion of banking union. Of course, Italy is strongly interested in the completion of banking union, particularly the introduction of the deposit guarantee, which is a common European deposit guarantee insurance for having a greater risk-sharing. But Germany is still insisting on other countries, are still insisting on risk reduction, and so in mechanism they can ensure this risk reduction is not inclined to accept the completion of the banking union if this doesn't happen. And this is a trade-off that still is difficult for Italy to accept. Then the second major challenge, the immigration challenge. As you probably know, the government has enacted a set of new measures that have contributed a lot to reducing the flow. Arrivals from Libya have fallen by 30% in the first 10 months of 2017 compared with last year. This may be taken as a positive evolution, but however I would say the emergency is not over because these are still high numbers, very difficult to manage for Italy. And then, for many reasons, I would say that the sustainability of these new measures are very dubious because this included, for instance, some agreements, not only with the very weak Saraj government in Libya, but also Malaysia and some tribes in the desert. And there is also the problem of violation of human rights of refugees in Libya. So both from a practical point of view, but also because of this certain opposition from the public opinion and some organization against these measures, this could become politically unsustainable. So the problem of having the European Union much more involved in managing this problem remains very topical. And with the European Union we have, regarding immigration policy, some very contagious issues. I would just mention the failure of the distribution plan for refugees which was approved in 2015. The difficulty we are experiencing in reforming the asylum policy in order to alleviate the burden for countries of first arrival, including Italy. Although some proposals now are somehow endorsed by Germany itself are making some progress, so we will see. And then the fact that the new border control were introduced in some countries and don't the Schengen seems to be still a risk has led to some tensions with other countries, between Italy and Hungary, particularly Austria, as you may see. And then Italy is also insisting on greater border sharing in maritime missions. Those missions, referring to those missions aimed at fighting smugglers and rescuing the migrants. So this remains a key request on the part of Italy. So another question linked to that is what potential policy allies within the European Union Italy can find, can hope to find or to... For some time there was a certain talk, not a very fond one, of the Southern Anti-Austerity Alliance. You could remember the initiative undertaken by Tsipras in Greece and some summit between the socialist or democratic leaders, including our foreign minister. But this was at a time when in France there was a land which heart-heartedly considered this option. This is not a really credible option because after all those countries have not converged interest, even in terms of economic policy, and other two weeks. So it would just be a sum of weaknesses. And there are much more interested in exploring other type of alliances. One can say that a preferential axis could be established with France on economic governance because after all Italy shares with President Macron a set of objectives to strengthen the European Economic Governance. But at the same time I would say clearly President Macron looks much more at Germany interested in mostly creating an axis with Germany. And I would say he's not inclined to consider a special alliance with Italy because also he's critical of some Italy's structural problems. And so I would say that that's also quite difficult to consider. Then with Germany we have an important convergence on migration and also other issues. So I would say Italy still, there are tensions of course on economic policy. But on other issues, especially with immigration, there could be an important convergence with Germany which is pushing for introducing new solidarity mechanisms. We are having increasing difficult relations with the Visega Group only because of the opposition of the country or those groups in particular Hungary and Poland to the relocation plan and so on on migration. But also for the violation of basic principle or legal law in those countries and Italy has taken a tough position in this regard. So to sum up of course Italy is mostly looking for some sort of common action with France and Germany. The problem is on migration there could be an important convergence. On economic governance much will depend of course on the agreement that France and Germany will be able to reach and the type of trade-off between risk sharing and risk reduction that could be reached between the European Union. That's a very delicate issue and we will see after the formation of the new German government whether some progress will be made or not. So very briefly the position of the main parties in Italy. We have the dominant party in the government now, the Democratic Party and its allies. They could be characterized as pronouncedly pro-European Union but very critical austerity policies. Then the far left is a small group. Rhetorically they are pro-U in favour of integration but they are strongly critical austerity policies in the euro. Some are still calling for exiting the euro although this is a minority within this group. The centre-right is a more diverse group including Go Italy, Belosconi's party which is mainly an aeroskeptical party but I would say it is unlikely as in the past if in power to take very antagonistic position towards the European Union. I would speak more of a sort of malign neglect towards the European Union on the part of this party. Then you have the League and the far-right party. They could be characterized as nationalist anti-U and strongly anti-austerity anti-euro but in an alliance with Belosconi's party they will certainly be forced to renounce their radical position as up in the past. The five-star movement is very ambiguous in European integration. Rhetorically they also say they are pro-U, they want the EU to be more integrated but at the same time they are also very much against the austerity policies, the fiscal compact and they have proposed a referendum on the euro but it seems that now they are not insisting on this idea which in any case would be rather complicated to implement because Italian constitution in any case forbids national referendum on international treaties. Public opinion trends. It's clear that at the moment now the sense of belonging to European Union or to be a European citizen is not particularly strong in Italy. As you can say it's weaker than the average in the European Union, it's much weaker than in Ireland. You can see the trust in the EU has dramatically fall since the beginning of the crisis, the economic crisis in 2007. So if you compare the figures in 2007-2012 and there has been in any case a rebound due to the improvement of the economy situation but much more I would argue because of the European capacity to save the eurozone so the new measures that have been rather effective in overcoming, averting the risk of a collapse which was very much felt in Italy in 2012, of course we were in 2011-2012 at the centre of a very deep crisis with the risk of a financial collapse of the country. This trend is very much in line with the one you can witness in other countries. So a clear, evident not so pronounced perhaps but significant improvement in citizens feelings towards the EU. You can say that the trust in the EU is much lower than in Ireland. This is the public opinion attitude towards the option of exiting the euro in case of referendum. The vast majority, a substantial majority is against the idea of exiting the euro but you can say the electorates are very different attitudes. The centre left just a tiny portion is in favour of exiting the EU despite the fact that the leaders of this party of some of them are critical of the fast fiscal rules of the European Union while Belosconi's party is divided, the electorate of Belosconi's party and the League and the five-star movement are mostly in favour, the electorate is mostly in favour of exiting the eurozone. It's more or less the same. Then we have an additional challenge and the risk of parliamentary grid lock after next election which were held in spring, sorry, 2018 of course. Then you can see now the figures of one of the most reliable opinion polls in these months by opinion poll company Ipsos. The projection is that the centre right will get probably the relative majority of seats in the House of Deputies but certainly not the absolute majority of seats. So you have essentially a three-poor system, very different from the bipolar one that we had until 2013 which makes it extremely difficult to form an alliance. And I would add that we have two chambers, the House of Deputies and the Senate with the same powers and there is a distinct possibility that they could have different political composition because of the slightly different but important mechanism containing the electoral law and this adds to the risk of a fragmentation of the party and the difficulty to form a coalition after the election. What are the political scenarios? You may have a centre-right government if the centre-right party manages to convince to gain ground electorally. This is a distinct possibility, not very likely. Second, a grand coalition government with the centre, they say, most centre is for the centre-right and the centre-left so an arrangement similar to the one we had at the beginning of this legislature in 2013. At the moment we still have a centre-right, the centre-left party with some centre's group which ensure support for the government so this is also possible. A populist government, some speculate about the possibility of populist government being a five-star movement in the far right but this is considered to be extremely unlikely because it is difficult for them to have a majority and then the five-star movement continues to say that they don't want to ally with anybody because in this case it is fairly clear that they will lose the large part of their electorate. The fourth scenario is of course one of prolonged instability in new elections. To end, what are the Italy's crucial issues? First, there is still a problem of filling the credibility reputation gap and it is much to do with the need to implement a much more convincing macroeconomic stabilisation in terms of a special reduction of the debt and also to enact much more effective structural reforms. The Renzi government introduced some reform that are largely considered to be too timid and too partial. There is a problem of internal political stability which admittedly can worsen and this may of course erode the credibility of the country in Europe and limit its diplomatic capacity. In any case, there is finally also a problem of coalition-based capacity within the European Union. The current government, headed by Gentilone, has been much more effective in this sense but I would say this will certainly remain a key problem. With Renzi, we had substantial difficulties in establishing cooperative links because of its anti-EU rhetoric with countries, even like-minded countries in Europe. So this will remain of course a problem, especially in case a government with different orientation regarding the EU should come to power. Thanks. Thank you, Etra, meticulous as ever. So we might go to some questions if anyone would like to start. The usual, if you could identify yourself. Etra has also agreed that this is on the records as well. Borek? Borek, you might just take the mic there just to help. I'm a member of the institution. I missed a kind of broader perspective in your presentation. Against the background of the fact that only last year we were talking about an existential crisis in the EU, okay, it may have eased off a bit, but what has not changed is the position of the EU and the international system generally. And especially the phenomenon of an American president who is abdicating the anchor role of the United States and the international system and focusing on a transactional approach to mostly bilateral relations between countries. And a great increase and apparently a non-stoppable increase in the specific ways of China and authoritarian regime, that and the position of Russia. So my question is, and you as Executive Vice President of an Institute of International Affairs, presumably have looked into this question which is exercising many others in the European Union, especially the President of France and the German government whenever it is formed. Is this not a factor that is taken into account initially? Is this not a factor that colors the Italian approach to the issues that are on the agenda, not only migration and consolidation of the Eurozone? At the very least, I think it's important that a view be taken by Italy when it comes to what you call coalition building capacity within the EU. I would say the Trump factor is considered to be very relevant. We conducted a survey which showed that public opinion is very much against. Trump is very critical of Trump, but not particularly worried about the effects of Trump on European integration. But decision making are in Italy and I think you have different attitudes in current government forces. They consider that this can be an incentive, an opportunity for Europe to try to become much more integrated, especially in defence and security policies. They should react to Trump policies in this direction. This is perhaps part of the strong support that Italy is giving to this new arrangement concerning defence and security, including PESCO. So in this sense I would say the Trump factor is saving a certain effect, a certain impact. Concerning Russia, as you know Italy accepted sanctions on Russia, but continues to say that this sanction should be continuously reconsidered. It would be in favour of alleviating them if there is a substantial progress in the implementation of the MISCA agreement. In general there is a big concern about the equilibrium in Europe. It is considered to be much more stable than in the past. The largely prevailing view in Italy is that Russia should be much more involved. Some avenues should be fine to involve Russia in this effort to improve the security situation in Europe. So Italy will certainly continue to respect its commitment and to keep its commitment with regard to Russia and the sanctions regime, but will continue to push for exploring possibilities or new types of cooperation. China, of course, the popular perception is that China is not particularly positive, essentially because some trade practices are considered to be damaging for Italy, as you see the opinion polls. At the same time Italy and the current government particularly think that some strategic plans of China, particularly of BOR, one road initiative, can provide some opportunity for Italy and a certain efforts will also be made to increase the bilateral relations. In general, and apart from this most specific problem of relations with the district countries, there is a feeling that the West is losing influence and my feeling is that this is having also an impact on the attitude of public opinion. We had a very popular US president, Obama in Italy, which was a point of reference. So this was a confirmation in the sense that the US, we know, was also very much involved in the management of the economic crisis, which was important. It was a confirmation that the US can be an anchor for us. Now with the new president this is put into question. This is feeling, this is a natural feeling of uncertainty, which is an additional problem, which we already have. Could I just have a follow-up, Ettore? Is it fair to say that Italy has traditionally not punched up to its economic weight in international affairs and within the EU? And if that's true, how has that changed over time? Has its influence increased or decreased relative to its economic power? By economic power you mean trade activities and also the industrial capacity. And just sheer size of the economy. It's a G7 economy. It's a big economy. I think that's a fact that helps Italy a lot in being influential at the European level. I think Italy has been rather influential at the EU level. But then you have the problem of the weaknesses in terms of macroeconomic indicators and the fact that it continues to be seen again as a weak link. In the European Union a counter-risk that can even contribute to precipitating a new crisis. This is a problem for Italy, for the diplomatic role and the international role of Italy. Alan Duke is a member of the Institute. You've made quite a few references to the fact that there's a strong anti-Australian sentiment in Italy. And that at one point, anti-Australity. And that at one point Italy was looking at a southern anti-Australity grouping. Isn't it time to expound that a little? There is an anti-Australity trend outside of the Mediterranean countries, including those. But outside Ireland has a strong anti-Australity view. Poland has a strong anti-Australity view. I think that there's a possibility that that kind of view will emerge in France if there's some evidence of it there still. With Chancellor Merkel now apparently weakened and having to contemplate maybe a minority government with the Greens, it seems that the opening for a more rational approach to fiscal prudence might be on the cards. Arguably the time for doing that is now, we're about to get to a point where the rules of the fiscal compact will be absorbed into the treaty. Personally I've always thought the fiscal compact was the German mania for rules that apply to everybody else but not themselves. That's a different issue. But it seems to me that politically the time for a more rational approach to what's known as austerity is there. Arguably is reinforced by the fact that we've just had a recent social summit which seems to be trying to open up policy makers to a more enlightened view of the effects of economic policy on the population. Is this not the moment to strike so to speak? The current government is arguing that it's push for moving away from austerity measures, austerity policies within the European Union has been to produce some results that did the larger margin of flexibility that Italy and other countries have been able to get from the Union has been also the result of this insistence on the part of Italy and other countries. So there has been a change, already a change in the attitudes. Of course this is considered to be, widely considered to be not sufficient. But just to say that the Italian government thinks that there has been some change in this regard. What can happen in the case of Germany, we know that a key partner in the coalition will be the liberal democrats which are very much in favour of the austerity. So I would not predict. It's just what happens to us. I don't know. In any case, I don't know what type of government will be formed. But I think in general the mood in Germany is not particularly in favour of changing this tough position on austerity. So I don't see a real room, a real space to convince Germany and other countries to change their position. It is true that in many countries there are movement parties insisting on different policies. But from this situation moving to a real effective alliance to change the fiscal rules in Europe it will be extremely difficult I think. And even the idea of the Southern European alliance has always been very questionable. Because indeed each country has its own specific situation. Some have been submitted to the Troika rules and the Troika control. This was not the case of Italy. So they have followed different ways to try to sort out of the economic difficulties. So I still think that there should be some type of trade-off between Germany and other countries in Italy and France to introduce perhaps even some new measures to keep public finances in control. But going ahead with the completion of the European Monetary Union, particularly the Banking Union, which is extremely essential for Italy. Could you just maybe linking to that. You mentioned in the presentation that Italy would like to see more powers for the European Central Bank. You might maybe just elaborate on that. I just said that it was very much supportive of course of the European Central Bank growing role. And of course Draghi is an hero in Italy. And this is important because of course the fact that the European Central Bank is seen as a crucial last resource instrument. And it's accepted that the European Central Bank, which is not an elected institution, should play so greater role in Europe. It gives a sense that we are in favour in any case of reinforcing common institution, although in our own interest. This was part of my presentation where I insisted Italy in fact is largely in support of reinforcing common European Union statements. And did you thought Italians have traditionally been big savers? In Germany there's a lot of criticism of the ECB because of the low interest rate environment. Many people have government bonds as part of their, how they store their wealth initially. Is there not resentment towards the ECB for keeping interest rates low for so long? No, I would say no because of course in the case of Italy the question is not so much the level of interest. But the question is whether the government is able to reimburse these bonds. So the European Central Bank is giving a guarantee, in a sense, support for the two-to-two Italian savers in this sense by helping, by ejecting liquidity and buying state bonds. It's a way to ensure that there is no financial collapse which will be very damaging for savers. So this is the central concern rather than the level of interest. So in completely different situations it's the opposite in fact. While savers in Germans are of course worried and they are against some of them. The ECB action because they feel they are damaged. ECB has a strong support. We just got past two o'clock. If there are no further questions let me thank you at your first visit to Dublin. Hopefully not your last. Many thanks for coming and can we show our appreciation usual?