Meloni government prepares exit strategy

Even if it is not officially among the items on the agenda at theEurosummitalong the lines of what was written in the letter sent to President Charles Michel, the president of the Eurogroup Paschal Donohoe will raise the issue of failure ratification of the Treaty on the European Stability Mechanism by Italy.

Donohoe’s letter

We should not lose sight of the importance di finalize the reform of Mes and the benefits this would bring to our institutional architecture. In recent months we have received regular updates on the ongoing parliamentary process for the ratification of the ESM Treaty in Italy, And we look forward to it its conclusion as soon as possible” he underlined Donohoe, in the letter sent days ago to the President of the European Council in view of the meeting of the summit of the leaders of the Eurozone countries (Eurosummit) which will be held today in Brussels. “The ratification of the ESM Treaty – continues Donohoe – will establish common public support to the Single Resolution Fund for banking crises, which is a long-standing agreement of ours and is in our interest for everyone, both for the Eurozone as a whole and for individual Member States, including Italy. The ratification of this treaty represents a further step towards a more resilient Banking Union and a fuller and deeper Economic and Monetary Union. After the ratification of the Treaty – concludes the president of the Eurogroup -, we will also be able to reflect collectively on the role and future instruments of the ESM”, as requested above all by Italy, which is very critical of the way in which the State-saving Fund was used to implement the controversial austerity policies, during the Eurozone crisis.

Giorgia Meloni’s reply

The Mes “is not the subject of discussion in the European Council” Prime Minister Giorgia Meloni cut short when commenting on Donohoe’s message aimed at urging Italy to complete the ratification process of the new ESM treaty.

The exit strategy

On the Mes the governmentfor now, takes time and prepare an exit strategy. The most likely path is one ratification of the ESM with the formal precision that Italy will never activate it. The issue is also divisive among the opposition benches: the Democratic Party, centrists and +Europa have always pushed for ratification. The M5S has traditionally always been anti-MES even if Giuseppe Conte is showing a certain caution on the issue.

The process for ratifying the ESM

Italy is the only country of the euro area a have not yet given the green light to the new Month. After the suspension, desired by the majority, which was voted last July, the legislative proposals on the ratification of the ESM will be discussed in the Chamber from 20 to 24 November. The bill will thus resume its parliamentary process.

Controversy between Italy and the EU

To feed the discontent that is spreading in Europe due to Italy’s failure to ratify the ESM, the end-of-year deadline is approaching, when the agreements also expire bilateral on the funds made available by the States to act as a bridge to the arrival of the ESM in support of the Single Resolution Fund. The ‘bank rescue’ fund after the eight-year establishment period at the end of 2023 it will have an endowment of almost 80 billion euros paid by the banks themselves. To these the ESM could combine aadditional line of credit emergency for others 68 billion. The fear is that now for events similar to those that occurred in mid-March at Credit Suisse they may not be enough the 80 billion from the Single Resolution Fund e without the ESM backstop, public finances would have to intervene of the countries potentially affected by the infection. Thus in European circles the discontent is twofold: on the one hand it concerns the idea that Italy’s failure to ratify prevents other countries from using the instrument, and on the other that of a potential impact on financial markets of this area of ​​uncertainty. Then there is the more strictly political issue: that of respecting the commitment to ratification after the signing of the treaty. The point, according to some European sources, raises a question about Italy’s own position with respect to the EU, to such an extent that some of the parties involved do not even seem to want to consider the possibility of non-ratification.