Italian Prime Minster Mario Monti on Sunday affirmed Europe and Greece would reach an "equilibrium" amidst financial turmoil that has rocked the eurozone.
"I think as we approach the 17th of June election day, the feeling in Greece that it's crucial for their country ... to stay in the euro will focus minds and political programs on putting together a collective willingness to do so," Monti said in an interview with Fareed Zakaria on CNN Sunday.
Monti said "Europe cannot abandon or even substantially undermine and reduce the commitments it asked of Greece" as part of its emergency loan programs. Still, he said, "I think an equilibrium will be found." "It is the most fundamental mission of the (European Central Bank) ... to see to it that the euro is safeguarded," Monti said. "Against this background, the ECB, the EU institutions and the Greek authorities ... will find a solution," he said.
Monti warned that unless Europe stimulates more growth, budget tightening would be to little use.
"Whatever is achieved on Greece will not really allow Europe and the Euro zone to breathe unless a more substantive agenda for growth is decided upon in Europe to accompany fiscal consolidation," he said. "Fiscal discipline in the end amounts to austerity if it is not accompanied by other policies," he added.
Italy is pushing for increased action by the ECB and for Germany to help fuel demand through its budget. However, Germany and the ECB have been wary of creating damaging inflation.
Italy is expecting to post a fiscal surplus next year after several years of deficits, but growth is not yet forthcoming. Monti said that although his country was boosting competitiveness through structural reforms, "we are actually destroying domestic demand through fiscal consolidation." "Hence, there has to be a demand operation throughout Europe, a demand expansion," he said.
The US and Italy were among the countries pressing Germany for a more accommodating stance on growth at the Group of Eight summit here this weekend. However, the G8 failed to reach consensus on the issue.