The New Mes is a disaster for Italy, but Macron needs it to take home the mini-budget of the Eurozone
Macron wants the mini-budget of the Eurozone, the Recovery Fund, but he needs the reform of the Mes to remove any alibi from the Germans. The pressure to 'hurry up' is therefore only French. But the price that Paris asks Rome to pay is very high: the New Mes penalizes us. Italy is not subject to univocal international pressure, but to the pressure of two powers with divergent interests: France, which wants to accelerate the approval of the New Mes and Germany, which wants to decelerate it. Even if France got what it wants from Italy, it would not get a more than symbolic Eurozone budget from Germany. It follows that Italy, by obeying the French, would not gain an advantage, on the contrary it would cause a nuisance to the Germans. To get out of the way, the Italian Parliament, when it expresses itself on 8-9 December, can only subordinate its approval of the ESM reform to the final approval of the Recovery Fund
Macron is playing the Recovery Fund as the second half of the match for the Eurozone budget, we saw it on Atlantico . He wants to use the veto of Poland and Hungary on the EU budget, to convince the Germans to transform the EU Recovery Fund into a Eurozone budget, through the instrument of enhanced cooperation. In other words, he wants to go back to the agreements he made with Berlin before Covid , the Meseberg agreements. There, the Germans had granted the French a Eurozone budget (albeit a very small one) only in exchange for a reform of the Mes Treaty: it follows the need, for Macron in order to remove alibis from the Germans, to take home the approval of that Treaty, whatever the cost.
Thus, he sent his minister Le Maire to Rome, greeted by the two 'French' corifei Bini-Smaghi and Sassoli, to give the order to lift the Italian veto. Significantly, he has devoted little time and few words to the Mes-Sanitary , or to the slowness in approving the spending plans of the elusive Recovery Fund , because that is not what he cares most about now.
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The price that Paris asks Rome to pay is very high. Suffice it here to quote Münchau (the New Mes Treaty serves to "lay the foundations for a restructuring of the Italian debt without saying it explicitly. The Italian government knows this, and has delayed as much as possible"), Giampaolo Galli ("it would be an immense calamity, it would generate destruction of savings, bank and business failures, mass unemployment and unprecedented post-war impoverishment of the population … would be a cold-blooded gunshot to savers, a sort of bail-in applied to millions of people who have trusted to the State by buying public debt securities. It would be a far worse event than what Italy has experienced in recent years due to the failures of some banks … For this reason we are concerned about the proposals to revise the ESM Treaty "), Codogno ("would have devastating effects on domestic demand, as well as on the functioning of the entire Italian financial system"), Cottarelli "the restructuring and more than two thirds of the debt would be a tax that Italians would have to pay. So not an alternative to austerity, but a form of austerity – the patrimonial that so many talk about today. So Italy is right to oppose "), sinanco Beda Romano (" some governments have obtained that the methods of lending to countries in crisis be revised, facilitating forms of restructuring of public debt "), even Brunetta (" it would open the door to debt restructuring – ie defaults – piloted, risking to alienate investors. The idea that a large country like Italy does not rule out defaulting risks increasing financial instability rather than reducing it ").
Then one can listen to De Luca's son, who defines all of this as “extremely positive for savers”, of course.
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The order arrived from Paris has however put Palazzo Chigi to attention: it will go in search of parliamentary approval at the signing of the Treaty. Before the Eurogroup on November 30, Gualtieri will pass by the Parliamentary Commission, before the European Council on December 10-11, Conte will pass in the two classrooms.
The government, however, is divided: we have the Democratic Party to say yes to the Treaty and yes to the loans, the 5 Stars to say no to the Treaty and no to the loans, in the middle Conte to say yes to the Treaty and no to the loans. The Democratic Party wants to take these loans, so it cannot accept Contian mediation and expects the denial to be expressed in non-binding terms: 'yes to the Treaty and perhaps no to the loans'. The scene has already been repeated twice, it seems, the last time in a majority meeting on Saturday evening, which ended with a stalemate and updated after Gualtieri's passage to the Commission.
There, Gualtieri will argue that the session, "since there is no vote but only a debate, does not affect the conduct of the minister within the Eurogroup"; that is, to the Eurogroup, he will feel free to give his own support and that of the government, albeit with reservations, ie subject to a subsequent confirmation by Conte at the European Council.
Gualtieri will argue that we are discussing "only and exclusively the definition of the negotiations relating to the reform of the ESM Treaty, which is a separate issue and has nothing to do with recourse to the ESM or the Sanitary Mes". But he will be forced to specify something about the use, for example: "Italy does not need to make use of that loan today" (today, but tomorrow?), It is "a life policy" (so Italy must die ?), “On the use you will have to go through Parliament anyway” (so it's a yes?) Or similar. In essence, he will say 'yes to the Treaty and perhaps no to loans' which is the "synthesis" that the Democratic Party is asking of him. This could cost him the opposition of 5 Star parliamentarians, not only among those who have always said 'no to the Treaty and no to loans', but also among those who say 'yes to the Treaty and no to loans'.
Gualtieri will argue that the New Treaty offers "a safety net for the banking sector". In Italy, some corifei (Bini-Smaghi, Brunetta, …) insist on talking about "an important step for the completion of the banking union" (Brunetta adds that the Mes can directly recapitalize the banks in crisis, what the Germans sank until since 2012 even). Unfortunately for them, things are a little different: even when fully operational, the 'safety net' would have a ridiculous amount of money and would only intervene after a bail-in , that is, only in the impossible case that it was not enough to 'save' the banks. the complete expropriation of shareholders, creditors and whoever held a current account there. This week the Dutch thought about making all illusions vanish, launching a powerful torpedo: they claim to insert "formal commitments concerning the rules for assessing the health of banks" in the draft conclusions of the Eurogroup and the European Council, from apply by excluding the Greek and Cypriot banks a priori, the others by reviewing them in advance and immediately. Implicitly, the torpedo subordinates the birth of the 'safety net' to the application without exception, therefore totally bloody, of the directive on bank bailouts (the infamous Brrd, which already in its moderately bloody form cost Renzi his head). Explicitly, the torpedo postpones the 'safety net' to the year two thousand and thirteen and makes it definitively useless: by then, the banks will have already been 'saved' with the bail-in . Fubini writes that the Dutch proposal has been accepted by Paris, which is perfectly possible, given the desperate determination that now animates Macron; but the fact remains that it is an openly provocative proposal.
Gualtieri will argue that "a veto would isolate Italy", he should add "from France". The aforementioned Dutch torpedo (backed by the Germans, FT says) is there to show that Berlin is in no hurry. Of course, the Dutch and the Germans are not opposed to the New Mes Treaty, on the contrary in 2018-19 they demanded it from the French; but today they would be happy for a postponement, since, as we have seen on Atlantico , they have no interest in offering Macron arguments to avoid stalling: both the Recovery Fund and the Eurozone alternative budget. In fact, while the Dutch were dealing with the New ESM Treaty, the Germans acted under the radar: we cannot fail to notice how the president of the EPP group in the European Parliament is doing melina; nor can we fail to notice the unnatural sympathy shown by Von der Leyen to Conte, just as he was accused of delaying the Recovery Fund ; nor can we fail to notice the emphasis with which the Frankfurter Allgemeine Zeitung published a splendid letter from the Polish foreign minister, strongly confirming its veto; nor can we fail to notice how even Romano Prodi has noticed that, to the Eurozone budget, "the German Chancellor is strongly opposed". The 'international' pressure to 'hurry up' is actually French pressure.
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In short, Italy is not subject to univocal international pressure, but to the pressure of two powers with divergent interests: France, which wants to accelerate the approval of the New Mes Treaty and Germany, which wants to decelerate it. Even if France got what it wants from Italy, it would not get a more than symbolic Eurozone budget from Germany. It follows that Italy, by obeying the French, would not gain an advantage, on the contrary it would cause a nuisance to the Germans.
To get out of the way, the Italian Parliament, when it will finally be able to express an opinion on 8-9 December, would be enough to subordinate its approval of the ESM reform to the final approval of the Recovery Fund . Since this implies that all countries have lifted their veto on the multi-year budget, the text would sound like this: 'Parliament commits the government to bring its approval of the ESM reform treaty to the European Council, only subject to approval by the European Council itself, the multiannual budget and the final text of the Recovery Fund agreements' . Since, after the agreements, the financing of the Recovery Fund still has to be approved by the national parliaments, the text would continue as follows: 'Parliament will proceed to the subsequent ratification of the ESM reform treaty, only subject to ratification by the other Parliaments of the new own resources necessary to finance the Recovery Fund ' . Paris would have nothing more to expect.
It would be a different text from the old motion (Molinari-D'Uva), voted by the House on 19 June 2019, which committed the government, among other things, to "express the final evaluation only after the detailed definition of all the various components of the package ”, namely all of the following: Eurozone budget, New Mes Treaty, strengthening of the banking union (approval of deposit insurance,…). While here it would be a question of obliterating any reference to the completion of the banking union, focusing attention only on the Recovery Fund . Berlin would have nothing to complain about.
By doing so, the majority and the government would achieve several results. They would silence the French without irritating the Germans. They would avoid Conte having recourse to the vote of the Forza Italia parliamentarians, allowing him to survive a little longer. They would leave the responsibility for any failure of the Recovery Fund negotiations to others: if these negotiations fail, no one can blame Italy. On top of that, if these negotiations fail, at least Italy will not have paid the very high price that Paris is asking it to pay today. Failing that, the majority and the government risk finding themselves without the Recovery Fund but with the Troika . They would sink into ridicule.
The post Il Nuovo MES a disaster for Italy, but it is needed by Macron to bring home the mini-budget of the Eurozone appeared first on Atlantico Quotidiano .
This is a machine translation from Italian language of a post published on Atlantico Quotidiano at the URL http://www.atlanticoquotidiano.it/quotidiano/il-nuovo-mes-una-sciagura-per-litalia-ma-serve-a-macron-per-portare-a-casa-il-mini-bilancio-delleurozona/ on Mon, 30 Nov 2020 05:04:00 +0000.