I have just paid tribute - which I renew in the name of all of you here - to the memory of the outstanding European and international personality that was Tommaso Padoa Schioppa, who recently passed away suddenly.

In opening this ceremony I should first of all like to warmly thank President Schifani who, in his welcoming address, introduced themes and expressed hopes which I myself share and in so doing used words of warm appreciation for the role which I play in close partnership with the other institutions of the Republic..

Public attention in Italy and even outside of this country has recently focussed closely on our political and parliamentary affairs, in part because of their rather unusual characteristics. But it would not be proper and would make no sense for me to mention them here today aside from some unavoidable reference in the context of a reflection that can and must allow itself to dwell on broader horizons.

How many problems have arisen for our country in the course of this year and already loom in the year about to begin! That is the theme I should like to discuss. In my view those problems have to do with relations between Italy and Europe in a world globalized as never before and beset with challenges, and with relations between society, politics and institutions in a phase that is critical for our economy and our development.

I start from the consideration that it has literally become impossible to reflect on Italy's conditions and prospects without analyzing the context and possible way ahead for Europe, for the European Union. Attention to that context was in fact discontinuous in the course of 2010 although it was precisely then that we felt the full range of conditioning, of obligations and of stimuli at European level closing in around us.

There is no doubt that the political debate was significantly influenced by a serious lack of analysis, of study and of assumption of responsibility concerning the dominant themes in European affairs and on the way in which the European Union is currently evolving.

The global financial crisis which broke out in 2008 immediately threatened and soon had serious repercussions on Europe's economy but it was in the second half of 2010 that it specifically and directly struck the euro with unsettling repercussions in the Eurozone.

There is no point in recalling the tensions that shook Greece after the state of its public finances came to light, nor of dwelling on Ireland's problems in connection with the crisis of its banking system, in whose reckless management some lending institutions from other European countries also played a role. What is worth stressing is that faced with tensions and the threat of contagion spreading to other member states of the Union there emerged not only a number of structural shortcomings in the European edifice but also ambiguities, weaknesses and divisions at political level on how to respond to what was happening.

Even after the European Council that took place a few days ago a number of questions remain open concerning joint action to be taken to tackle and prevent financial crises from occurring in individual states, to arrange efficient governance and, in support of the single currency to assure the kind of coordination of budgetary and economic policies that has been missing so far but is essential for stability and growth.

Nor have we completely left behind us, as we must, a situation when the destiny of the euro if not of the Union itself appeared to be at risk, partly as a result of imprudent remarks that were made, and when the commitment to defend and strengthen both of those historic and irremissible achievements appeared to be in doubt.

Well, Italy can only - in keeping with a choice and a line of conduct that are now more than fifty years old - stand in the front line not only in defending the fundamental reasons for the process of integration and its further development but in confirming the validity of adopting the euro and what it has meant, in the interests of all, for the unity of Europe, for its stability, for its growth and for its role in the world.

Italy therefore today supports proposals such as the one suggested by an authoritative pro-European personality of ours and put forward by our Economics Minister together with Eurogroup President Juncker, for solutions that are organic and credible in the face of the euro crisis as opposed to a wait-and-see approach offering initiatives that are hesitant and insufficient in scope.

Support for such solutions has been voiced from significant quarters in Germany - and there is no need to swell on the importance of the fact - among other countries together with warnings of the risk inherent in "a lack of political courage".

My hope and my personal efforts are for a renewed capacity on the part of Italy to contribute to the boosting of common political will in support of the development of European integration. But that - let it be clear - involves the maximum seriousness on our part in accepting in Europe a shared "culture of stability" which means having to come to terms with the imperative need to reduce the very serious burden of the public debt accumulated by the Italian state which , obviously, also penalizes our development.

We are right to emphasize - as recently stated by the Governor of the Bank of Italy in words which I now make my own - how "Italy has strong points which other countries do not have" because it possesses a "robust financial structure", and registers "the lowest indebtedness of families in the Union " and can count on banks that "have emerged from the crisis unscathed " thanks to the "quality of their assets" and the prudence of their behaviour.

It is right to strive, as the Government has done, for these strong points to be recognized at European level. And it is right to recall and underline that, as noted by scholars of undoubted seriousness, that financial stability and economic growth are inseparable, that public investment spending should be determined and treated differently from current account spending and that the public debt of individual countries should be brought down along a trajectory calculated - taking account of the existing overall situation - according to a timetable and terms such as to avoid doing counterproductive damage to the chances for growth.

But, that said, one should be under no illusion that there can be any avoiding of the need for strong and continuing efforts on Italy's part to reduce the level of its public debt. And that requires further reflection on how to proceed together with much re-evaluation, correction and sacrifice in respect of deep-rooted habits and expectations as well as a more objective, concrete and open debate on the priorities to be followed in allocating available public financial resources. Is it really possible that no one has thought of setting up a bipartisan forum for reflection and research on the issue?

At the same time the underlying question must also be tackled - there can be no further delay here either - of the causes of low growth and scarce productivity of our economy, which has been under-performing for too long. And we are aware of how removing those causes involves implementing various reforms that are still being debated without any prospect of getting them off the ground.

The questions I have briefly recalled are the ones I recently referred to when I called for a new "spirit of sharing", which I said was essential in order to get the political establishment and organized labour to identify without any a priori designs or positions the themes, needs and challenges inevitably arising for any responsible representative of the people.

In other words let there be a debate on the various possible options regarding the reforms to be adopted, the medium- and long-term public policies to be followed and the collective responses to be stimulated: but no one should evade exercising such responsibility.

Italy can and must pull through in the present historical phase, however difficult that may be: we have the potential to succeed, together with the human resources and the cultural, technical and business energies. And we can again express the same formidable surge of determination, constructive commitment and innovative impetus which allowed us in 1961 to celebrate, together with the centenary of Italian unity, the results exceeding any reasonable expectations which we had achieved soon after emerging from years of dictatorship and from the destruction of war. But in order to make it now we must unflinchingly confront weaknesses to be overcome and challenges that cannot be eluded. The condition is for us all to become fully aware of the risks we are running and the hard tests that await us not only in the next few months but in the next few years.

Let me say that we are far from having achieved such a common awareness today. That is made clear by the bitterness of the political debate and the contents and tone of a continuing dispute that has very negative repercussions on the life of the Republic's institutions, at national level above all, which prevents them from working together more fruitfully and which precludes more satisfactory results.

A political quantum leap is therefore all-important in Italy. It is decisive for the stability and continuity of life institutional level and for the maintenance of the "Italian system" in a European context marked by such strong shocks and tensions. Naturally, I continue to be aware of the basic distinctions. The fate of any Government is decided by Parliament which votes or withdraws its confidence. The length of Parliaments is fixed under the Constitution for periods similar to those set in other democratic countries -- periods fixed not haphazardly but corresponding to the time needed in order to implement a political programme of adequate scope.

The electoral reform of 1993 aimed at ensuring governability and the stability of the executive but was never followed up by coherent institutional reforms. Experience tells us, however, that even in parliaments elected under a majority electoral system it is politics - and the development of political relations and conflicts as well as the capacity to manage them - which determine the stability of the governing coalitions voted by electors.

But under our system of government it remains the prerogative of the Head of State - no matter if some have the bad taste to diminish its importance in words - to sanction the impossibility of completing a parliamentary term and thus to dissolve Parliament. Early dissolution of parliament has been an imprudent but characteristic Italian practice which we had hoped to be rid of and I am bound in the general interest to resist its return. It was not by chance that I decided in mid-August - following a spectacular political breakup in the leading government party people when people hastily started to speak of early elections - that I had to call on all political forces to reflect on the consequences for the country of heading "towards a political vacuum and a very bitter electoral battle".

Achieving a democratic system effectively based on alternating majorities, as was done from 1994, must not be called into doubt. One should however look at how, in Europe, countries with political systems long based on bipolar or two-party models tested over decades are experiencing changed scenarios and experimenting with solutions that appear possible and opportune. And one should also reflect again on the need for constitutional reform - a reform which at first it had not seemed difficult to achieve in this parliament since the measures involved were apparently already broadly agreed.

I shall continue, on my side to call for the continuity in the life of our institutions and thus in the life of a parliament which has more than two years to run: providing, of course that there is a prospect of the executive governing effectively and that the work of the Chambers of Parliament remain productive. I shall at any event operate according to constitutional rules and practices which I am duty-bound to observe within the limits of my role and of the objective possibilities available, while taking full account of the vote expressed by the electorate in 2008.

I shall strive above all to operate in such a way that now and in the future - independently of whatever solutions are agreed for the Government - it is possible to achieve that "spirit of sharing" I mentioned while also making clear the sense of that expression and the importance of that proposal. Herein lies the "political quantum leap" the country expects. It expects it because the morality and dignity of politics is at stake. It expects it because people are tired of the way the political world has isolated itself, of the daily competition between different kinds of factiousness, of the wall of incommunicability between the majority and the opposition. There is a gap, now grown alarmingly wide, to be filled between politics, institutions and Italy's social and cultural forces in a country which nevertheless continues to exhibit again and again its sense of responsibility, its dynamism, its unity and its solidarity. .

Examples abound. I am thinking of the efforts undertaken by businesses - many of them small and medium-sized - which throw themselves into the exploration of distant, fast-growing markets and competing successfully. I am thinking of the sense of responsibility with which so many workers are responding to the hardship of losing their jobs or of being laid off and having their wages cut. I am thinking of the efforts made by the unions in order to agree on proposals regarding the leading economic and social issues -efforts which I hope continue and meet with concrete responses. I am thinking of the particular, important contributions made by associations and aid and charity workers. But I am also thinking of the tenacious day-to-day activities of all those who work scrupulously in the service of the fundamental structures of the state.

And in that connection I shall limit myself to citing the precious examples of dedication of our armed forces and in the first instance of the soldiers who, in their missions abroad, honour Italy in all senses of the word. And I shall also mention the significant results achieved with great tenacity, skill and passion by the judiciary and the police against organized crime according to measures and programmes approved by in parliament with a far greater majority than that held by the Government.

What we have here is a range of lively realities and active contributions that need the guidance and the support of the politico-institutional framework as a whole. There is substantial room here for confidence in the forces and resources of the country together with strong grounds for criticism.

All my considerations so far are related to that sense of national unity which it is natural for all of us to share and will, I am sure, emerge enriched and renewed from the celebrations of the 150th anniversary of the unity of Italy. The celebrations - in which, significantly, the Italian Church chose to participate through its "Cultural Project" - have taken on added depth and breadth in the course of the year. That is due above all to the efforts of cultural institutions starting with the main ones -- schools, the intellectual establishment and publishers and the media as well. It is also the result of a profusion of local initiatives promoted or supported by concerned institutions.

But what has remained insufficient is support at national political level to be deployed around next year's key dates especially in view of the interest for our anniversary shown outside of Italy in many friendly countries familiar with our history. In conclusion we shall be able to better gauge the level of attachment to what historically unites us as a nation and makes of our unified state an inalienable haven in the global era in which we are called on to compete.

That attachment runs deeper than is sometimes summarily indicated by current positions. When I recently visited a number of places in Veneto that had been badly hit by floods I was struck when I met a with mayors and heard them appeal to Italy as Italians - while also denouncing incomprehension and expressing critical positions - and to witness them doing so while simultaneously getting down to work in exemplary fashion to overcome the emergency.

That happens because the state has changed and is changing, overcoming all residual, historical traces of centralization, evolving along increasingly autonomous and federalist lines along a path so far broadly accepted by all.

But the most serious and worrisome shortcoming - I never tire of saying it - of our unifying process remains the gap between North and South: a gap that should be prevented from taking on the appearance of a fracture and which therefore requires a novel and determined approach much like the one needed for other structural weaknesses destined to become - as I mentioned before - fatal risks for our country, and which we should therefore defuse in the next few years.

And lastly the efforts deployed for our 150th anniversary and the question of our history and on the roots and reasons for our unity must reach the young and respond to their growing discomfort with valid and ideal answers. There is no underestimating their concrete discomfort over unemployment or the precarious nature or poor quality of employment, over inadequate training and more generally over uncertainty over the future and over the wavering of the hopes and enthusiasm that should accompany young people's entry into the adult world.

That is how we should also interpret the recent demonstrations, and not just in terms of a single bill. And underlying such protests there is also a reaction to the neglect of our cultural resources which are given little attention and provided with clearly insufficient financing: I refer to cultural resources in the broadest terms, starting with research and higher education.

It is therefore necessary and urgent to seek and open up new channels of communication and exchanges with the new generations. While at the same time inviting young people who exercize their right to assemble, to demonstrate and to protest to beware and to distance themselves firmly from groups who promote intolerable illegality and destructive violence that can only lead to defeat for the forces of the young and to dramatic damage to democracy.

I have finished. To you, who hold up the fabric of the Republic's institutions I extend my thanks for listening to me together with my fifth Christmas and New Year's wishes from the Quirinale Palace. And I also formulate for all of us the hope that some of the seeds contained in today's reflections may bear fruit in the future.