Selling cultural relics to repay debt

The financially-strapped Italian government has put on sale Palazzo Molina, a cultural heritage overlooking the Venetian canals. The Italian government decided to allow the use of the four-story building as a hotel or apartment as long as the facade and the garden of the 16th-century building are kept intact. Even if it sells the building for 10 million to 15 million euros, the amount will cover only a fraction of its national debts of 1.9 trillion euros.

When Italian businessmen and bankers urged their government to implement reform, including selling national treasures, Italian Finance Minister Giulio Tremonti announced a plan to create a national wealth fund to attract investors. A national wealth fund worth 30 billion euros is expected to be launched in January next year. Italians and Koreans are known to have a lot in common. Both live on a peninsula, like spicy food, and are hot-tempered. They are also anxious to avoid debts. Italy is apparently trying the hardest to rescue itself out of debts among countries in Southern Europe.

Greece, the epicenter of the financial crisis, is different. Germany asked Greece to agree to tighten its budget in return for help. The financial deficit goal that Athens came up with Sunday is far short of the expectations of its neighboring countries. Without the release of an 8 billion-euro bailout this month, Greece will default. While voices in Europe say Greece should sell the Parthenon or an island, the country has responded with strikes and protests against tightening the budget, calling the idea “infringement on national sovereignty.” As a result, an increasing number of retail facilities near the Parthenon hang “for-sale” signs.

Korea’s national debt has jumped almost 50 percent from 299 trillion won (253.6 billion U.S. dollars) in 2007, before the inauguration of President Lee Myung-bak, to 448 trillion won (379 billion dollars). The Strategy and Finance Ministry said it will issue deficit-covering bonds until 2013, and will only repay them from 2015. It sounds like that the incumbent administration is taking out debts and passing the responsibility to its successor. It will be a big problem if the government cannot cut investment in infrastructure or welfare and issues bonds in the event of another global financial crisis next year. To prevent this, the government should take preemptive action by cutting next year’s spending immediately.

Editorial Writer Hong Kwon-hee (konihong@donga.com)