Italy's prime minister calls for Gulf to put trust in Europe

L-R: Sultan bin Saeed Al Mansouri, UAE Minister of Economy, Italian PM Mario Monti and Abdul Rahman Saif Al Ghurair, the chairman of Dubai Chamber, listen during the UAE-Italy Business Forum. AFP PHOTShow more

Mario Monti, the Italian prime minister, yesterday reassured potential Abu Dhabi investors that Italy and the euro zone were on the path to recovery, while on the latest leg of a GCC tour to drum up investment.

Speaking to a room full of senior government figures, bankers and finance executives in the capital, Mr Monti also said there were investment opportunities within Italy, the single currency area's third largest economy.

"The euro area is overcoming its crisis but what we are seeing in the past three years has been a fiscal and banking crisis in the euro zone but not a crisis in the euro," he said during a lecture at a majlis hosted by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces.

"I think one can well find in the European economy and the Italian economy areas for investment with rates of return comparable to the rest of the world."

Asked by Sultan Al Mansouri, the UAE Minister of Economy, why Abu Dhabi's sovereign wealth funds should consider investing in the euro zone and Italy, Mr Monti said both offered political stability and rule of law.

His tour to the region comes as the focus of investor worries in the euro zone debt crisis honed in on Italy's fellow single currency members: France and Greece.

The markets have factored in bad news to the point where they were little moved by Moody's decision to strip France of its top-notch credit rating. The CAC 40 index of leading French shares had gained 0.5 per cent to 3,457.31 in late afternoon trading yesterday.

Markets were awaiting a finance ministers meeting in Brussels to give a tentative sign-off to the release of €44 billion (Dh206.88bn) in fresh funds to Greece.

For its part, Italy was putting in place structural reforms to its labour market and other parts of the economy to put it on the right track, said Mr Monti. The country was also working hard to cut its budget deficit to zero.

"Once the underlying mechanisms are put in order through these structural reforms, Italy has more growth potential than most other European countries because Italy is starting lower," he said. Mr Monti has already scored some success on his trip to the GCC.

Qatar Holding, the investment arm of Qatar's sovereign wealth fund, on Monday agreed to invest up to €1bn in Italian firms.

Qatar Holding will pursue a joint venture with Italy's strategic investment fund, targeting sectors including food, fashion, luxury goods, furniture and fashion, tourism and leisure, according to a statement on Monday, cited by Reuters. The partners together are to provide capital of up to €2bn equally over the first four years.

During a speech in Dubai earlier yesterday, Mr Monti said there were areas for potential cooperation between the countries within manufacturing and services.

"We have to explore the complementarity of our two economic systems," he said. "Synergy and co-investments between Italy and UAE should become a byword for the development of initiatives in the GCC market but also in third countries, especially in North Africa".

The UAE was Italy's biggest trading partner in the Arab world, he said.

Italian exports to the UAE rose by 28 per cent to €4.7bn last year. Exports were likely to rise even further this year given that exports had reached €3.2bn in the first six months, he said.

Sultan Al Mansouri said trade had climbed nearly 300 per cent over the past decade.

"This huge growth is an indicator of our good relations and shows the excellent potential we have for economic growth moving forward," he said.

Abu Dhabi has in the past been an active investor in Italian business. Mubadala Development, the strategic investment company controlled by the Abu Dhabi Government, bought a 5 per cent stake in Ferrari in 2005 for a reported €114 million before selling it back to Fiat, Ferrari's parent company, in 2010.

Aldar Properties also built Ferrari World, a theme park built around the sports car maker's brand, at Yas Island.