By Roberta Rampton
WASHINGTON (Reuters) - President Barack Obama and Italian Prime Minister Enrico Letta congratulated each other on Thursday for surviving extended budget crises and pledged to work together to advance U.S.-EU trade talks and address security issues.
The two leaders met at the Oval Office on the day after Congress agreed to fund the U.S. government until January and averted a debt default by lifting the nation's debt ceiling until February. The U.S. government reopened after a 16-day shutdown.
Letta said the U.S. deal would help keep global interest rates low, which is vital for his debt-laden nation.
"It is his success, but it is also our success, because yesterday's decision was very important for the stability of the markets in the world," Letta told reporters after meeting with Obama.
"I'm very glad for yesterday's result. It's very important for our country," he said.
Letta is facing his own budget headaches.
Earlier this month, he won a confidence vote in Parliament after a challenge by former Prime Minister Silvio Berlusconi. This week, he unveiled a new budget with tax and spending cuts.
Obama congratulated him for winning the vote of confidence and for his budget. "I think it's clear that Italy is moving in the right direction in stabilizing its finances and embarking on reforms that will make it more competitive," Obama said.
Domestic reaction to Letta's budget - which must be approved by the Italian Parliament by the end of the year - has been sharply negative, and may pose a new threat to the stability of Letta's coalition government.
Obama and Letta said they talked about how to expand the European economy and the importance of an EU-U.S. trade agreement known as the Transatlantic Trade and Investment Partnership, which would be the world's biggest free-trade deal.
Italy will hold the presidency of the European Union in 2014, and Letta said, "My dream would be to sign" the trade deal next year.
"We have to protect against protectionism," he said.
However, the latest round of EU-U.S. talks were scuttled earlier this month because of the U.S. government shutdown, complicating talks.
Obama and Letta agreed to work together to address security issues in Libya and Syria. Obama praised the "concrete efforts" to destroy Syria's chemical weapons stockpile.
"We both believe it's important to build off that success, or at least that good start, to also talk about the humanitarian suffering that the Syrian people are experiencing," Obama said.
Letta said he spoke about Italy's concerns over migration from "failed states in Africa" and from Syria.
More than 300 African migrants died in a recent shipwreck at Lampedusa, off Sicily, part of a surge of migration from North Africa that has been exacerbated by the civil war in Syria, chaos in Libya and instability in Egypt.
"We don't want to have Mediterranean as a dead sea. Mediterranean has to be a sea of life," Letta said.
(Additional reporting by Mark Felsenthal; Editing by Sandra Maler and Cynthia Osterman)