Obama says austerity in Europe has caused ‘years of stagnation’

US president says pro-growth policies needed, in interview with Italian newspaper

Italy’s prime minister Matteo Renzi and his wife Agnese Landini arrive in Washington on Tuesday ahead of a gala banquet at the White House being hosted by US president Barack Obama. Photograph: Tiberio Barchielli/EPA/Palazzo Chigi press office
Italy’s prime minister Matteo Renzi and his wife Agnese Landini arrive in Washington on Tuesday ahead of a gala banquet at the White House being hosted by US president Barack Obama. Photograph: Tiberio Barchielli/EPA/Palazzo Chigi press office

US president Barack Obama has criticised austerity policies in Europe, which he says have caused "years of stagnation" and "frustrations and anxieties" throughout the continent.

In an interview with the Rome daily newspaper La Repubblica, Mr Obama said some European countries had taken a different approach to the economic downturn than that adopted by the United States.

“I would argue that austerity policies have slowed down growth in Europe. In some countries, we have seen years of stagnation, which in turn have prompted the economic frustrations and anxieties that we see throughout Europe, especially among young people who may be facing unemployment,” he said.

Mr Obama was speaking ahead of a meeting in the White House on Tuesday with Italy's prime minister Matteo Renzi, who hopes to push through major political reforms in a referendum in December.

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The US president said Europe’s experience with austerity showed why the reforms being pursued by Mr Renzi were so important.

"He understands well that countries like Italy must enact a reform process in order to increase productivity, stimulate private sector investment and kick-start innovation," he said.

The December referendum is regarded as a make-or-break moment for Mr Renzi, 2½ years after he came to power in a "palace coup" in which he ousted the incumbent, Enrico Letta.

At the heart of the referendum is a reform of the Italian Senate that would eliminate Italy's two-chamber legislative system as well as reduce the number of parliamentarians.

Critics argue that the proposed reforms, including a new electoral law, undermine the democratic checks and bolances enshrined in Italy's 1948 constitution, checks intended to ensure that Italy should never again suffer a dictatorship such as that of Benito Mussolini between 1922 and 1943.

Complicating matters is the fact that Mr Renzi originally said that he would resign if his reform package was defeated in the referendum.

Migrant crisis

In such a context, Mr Obama’s comments look like a formidable “assist” to Mr Renzi, whose “Yes” campaign is currently trailing in opinion polls. The US president also labelled Italy “one of America’s closest and strongest allies”, whilst he acknowledged Italy’s “leadership role” in the international migration crisis.

“Italy finds itself in the front line of a refugee crisis which is both a humanitarian catastrophe and a test for our common humanity,” he said. “The images of so many migrants, men, women and children, crowded into small boats and then drowning in the Mediterranean, are worse than heart-rending. Italy continues to play a role of leadership [in the Mediterranean] and the European naval force led by Italy has saved the lives of hundreds of thousands of migrants.”

Mr Obama and Mr Renzi are expected to discuss migration, economic issues and international terrorism when they meet in the White House on Tuesday afternoon. On Tuesday night, there will be a gala banquet at the White House hosted by the president and his wife Michelle for Mr Renzi and his wife, Agnese Landini.

In honour of the Italian guests, the meal will be prepared by Italo-American celebrity chef, Mario Bartali, whilst musical entertainment will be provided by Gwen Stefani. For his part, Mr Renzi has opted to enliven the occasion by bringing along some VIP Italian guests including fashion mogul Giorgio Armani, Oscar-winning film makers Roberto Benigni and Paolo Sorrentino, paralympic champion Bebe Vio and Giusi Nicolini, the mayor of Lampedusa, the small Meditteranean island which offers a first port of refuge to hundreds of thousands of boat people arriving in Italy.

Needless to say, not everyone has been entirely convinced by the timing of this state banquet. Renato Brunetta, a deputy with the opposition Forza Italia, suggested that Roberto Benigni's inclusion in Mr Renzi's party tonight represented a "reward" for having his expressed his support for the Renzi referendum. "What squalor", commented Mr Brunetta.

Incidentally, the banquet has been renamed “The Last Supper” by Italian media, given that it will be the last such state banquet of the Obama presidency.