Reluctant Italy postpones eurozone bailout fund’s ratification

The Italian government could postpone until September the ratification of the European Stability Mechanism, a highly divisive issue which is not considered urgent by Forza Italia, as the party insists there is a need for a ‘democratic control’ of the mechanism.

The European Stability Mechanism (ESM) is an intergovernmental organisation established by Eurozone member states in 2012. It is not an EU body and its aim is to throw a lifeline to those countries facing financial distress while being cut off from markets.

In return, these countries should carry out deep reforms ensuring the economy’s long-term stability.

In order for ESM to take effect it needs to be ratified by all Eurozone members. Italy is the only member which has not so far ratified the mechanism.

Although the Italian public debt has skyrocketed and the country’s treasury said last week that the mechanism’s ratification could boost the credit standing, the coalition government remains divided.

The coalition government consisting of Fratelli d’Italia (ECR), Forza Italia (EPP) and Lega (ID) now aims to vote the ratification in September, postponing the original vote in the Chamber of Deputies initially scheduled for Friday.

Prime Minister Giorgia Meloni (FDI/ECR) said a parliamentary discussion over the ESM now would be a mistake, “even for those who are in favour of ratifying the treaty”.

“Ratification must be done when the conditions are right”, Forza Italia MP Raffaele Nevi told EURACTIV.

Forza Italia’s position is in favour of ESM ratification but on one condition: there must be a “democratic control” of the Mechanism, as there is for the European Central Bank, which is controlled by the European Parliament and the European Commission.

“We must not entrust these matters to technocrats. They must be managed by far-sighted and careful European politicians, otherwise, we risk doing damage as has already happened in Greece”, Nevi noted, referring to the Greek crisis period when the country received an ESM bailout.

Read more: Independent report unveils flaws in Greek bailout

The parties in favour of ESM in Italy are Partito Democratico (S&D), Azione-Italia Viva (Renew) and Più Europa, with a total of about 94 MPs, while the outspoken opponents – at least so far – are Fratelli d’Italia (ECR) and Lega (ID), with 183 MPs.

If a vote were to take place on Friday, according to what the leaders of all political parties in parliament said, the ESM ratification would be rejected.

Nevi explained to EURACTIV that after the debut of the National Recovery and Resilience Plan (NRP), there is plenty of funds to spend and the need for the ESM – as of today – does not exist.

“Definitely Italy does not need access to the ESM. As for ratification, there is no hurry. If it were so urgent, Draghi (former PM) would have already done it”, he said.

In addition, critical voices suggest that Meloni is stalling to make a U-turn and give the green light to ratify the ESM, which she fiercely obstructed in the past.

In December 2022, during an interview with Rai1 tv channel, Meloni said: “As long as I count for something, Italy will not accede to the ESM. I can sign it with blood”.

The Italian PM has been complaining for some time about the “too stringent” conditionalities of the Mechanism, which as a “privileged creditor” risks becoming a “noose around the neck” for debtor countries. However, she does not rule out its ratification.

Vice-Premier and Transport Minister Matteo Salvini (Lega/ID) is also adamant: “I don’t think there is any need to get into the hands of foreign entities, also because 600,000 Italians have subscribed to Treasury bonds worth more than €18 billion in the past few days”.

League senator Claudio Borghi promises never to vote for “such a thing” and guarantees that the League (ID) will be consistent with its twelve years of battles.

Giorgia Meloni is expected to intervene in parliament on Wednesday, before the European Council which starts on Thursday in Brussels.

(Federica Pascale | EURACTIV.it – Edited by Sarantis Michalopoulos | EURACTIV.com)