Will there be an exchange between the ESM reform and the new Stability Pact?
Because it is not a good deal for Italy that the reform of the Mes and that of the Stability Pact can enter the same negotiating package. Giuseppe Liturri's analysis
There are times when euphemisms get in the way of understanding a fact, and you have to call things by their proper names. Here, with regard to the ratification of the Treaty of the Mes – which in recent days the words of some European exponents have brought to the fore – the lie is now used without any shame.
This is what we feel like saying after the three-day G7 meeting of economic ministers in Japan which ended yesterday. On the sidelines of the meetings, the minister Giancarlo Giorgetti had to face again the president of the Eurogroup Paschal Donohoe and also the Commissioner for Economic Affairs Paolo Gentiloni did not miss the opportunity to put his load of 11 on it ( "L'Italia ratify the first possible" .
The Irishman wanted to recall that “ the treaty has now been ratified by all members of the Eurozone” and that “without Rome's go-ahead, no other country will be free to access it if it needs to in the future”.
But this last statement is clearly not true. Today, a treaty in the text ratified by our Parliament in July 2012 is fully in force, which allows all the states of the Eurozone to access two credit lines (one precautionary, the other with enhanced conditions). The reform only changes the conditions for accessing these credit lines, making the conditions for accessing the precautionary one more onerous. To the point that today, many of the countries of the Eurozone, in case of need, would be forced to access it directly under enhanced conditions. The one with the "Greek-style" memorandum of understanding and connected macroeconomic adjustment program that would bring the unfortunate country to its knees, rather than help it.
So, if we really wanted to split hairs in four, it is precisely the reformed Treaty, blocked by the Italian Parliament, which would prevent many countries from accessing Mes funds. The reform of the ESM – without which it seems that the world risks collapsing – introduces only one big element of novelty, and that is the loan of the ESM in favor of the Single Resolution Fund (SRF) with a shortage of liquidity to rescue a large European bank from instability. So, at the very least, it should be the SRF that complains about the failure to ratify the reform, never any member state, as Donohoe states. But in this case, as analyzed in detail here , insisting means admitting that some European banks are about to collapse and we need to resort to the last resort. A patch worse than the hole.
Still on the subject of Mes, the negotiating position that the Italian government officially expressed in the final communiqué is not a little worrying. In fact, it seems that a negotiating position is making its way that sees the Mes as a bargaining chip to obtain changes to the Stability Pact, whose negotiations are already in full swing. In particular, the Italian government aims to exclude digital and green investments from the calculation of the parameters to be respected. This is what it reads verbatim:
“ The Mes and the new European governance were instead the main topics discussed between Giorgetti and the president of the Eurogroup Paschal Donohoe during an interview where the minister renewed his willingness to dialogue on the treaty if introduced in a framework of changes already advanced from Italy, in particular the temporary exclusion of some expenses for investments in the digital field and for the green transition, including those of the Pnrr".
Nothing new. We know that this is the way people trade in Europe. It is the famous "logic of baggheddo" that the then President Giuseppe Conte tried to pass. But then it ended up that we immediately accepted the negatives for us and the positives (completion of the banking union) were postponed until the Greek calends.
But now even just thinking that the reform of the ESM – which is simply inadmissible and whose only reform should be the one that provides for its liquidation – and that of the Stability Pact – which will decide the future of the economic policy of the our country in the coming years – is simply suicide. Bringing home (perhaps) the result of a slightly less recessive Stability Pact as a counterpart to an instrument that seems to be made to create problems for our country, especially in the reformed version, is just a bad deal. The Mes cannot and must not enter into any negotiating package and Minister Giorgetti did wrong in taking that road that ends in a ravine.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ci-sara-uno-scambio-riforma-mes-nuovo-patto-di-stabilita/ on Sun, 14 May 2023 10:37:51 +0000.