Rome remains cautious on using the European Stability Mechanism (ESM) as it was designed to address different shocks. But if the fresh rules governing the new credit line are considered adequate, then it’s up to the Italian parliament to decide to use it or not, Italian Prime Minister Giuseppe Conte told EURACTIV Italy in an exclusive interview.
The ECB's EUR 1.1 trillion initiative, and the derogation from the capital key provision on the purchase of government bonds, are a protection for Italy's public debt. Do they show that together we are stronger and that no Member State can make it alone? What would you say to those in Italy who are proposing the exit from the euro?
The ECB is acting not to protect individual states, but to ensure financial stability and the proper functioning of monetary policy in the euro area. All Member States are taking advantage of its action. Being in the euro system has helped to protect our savings and protect Italy from financial speculation.
However, it is right to note that monetary policy is only one of the legs we can rest on. Monetary Union involves an even closer link between the Member States than the EU, so we must necessarily act in a coordinated manner, including in terms of budgetary policies. The divergence between national economies, which is already high, poses a risk to the functioning of the common market and an even greater risk to the management of monetary policy. If the fiscal response to the pandemic is not fair for everyone, we risk very dangerous effects. Monetary policy has given a first, strong response. Now the European Commission and the Member States must do the same.
In the pandemic, the speed of common institutions, such as the ECB and the Commission, stands out compared to intergovernmental institutions, which are paralysed by national vetoes. Does Italy support the Commission's proposal to go beyond unanimity and move to qualified majority voting on taxation and foreign policy?
The need to reflect on the ways to make the Council's decision-making process even more effective has been felt, by Italy and elsewhere, even before the pandemic, for example in the context of the preparations for the Conference on the Future of Europe. The crisis caused by Covid-19 has made it even more manifest how necessary it is for the Council to be able to respond with rapid and effective decisions to challenges that strike at the heart of our continent. At the same time, I must point out that the European Council has so far found, albeit with considerable political effort, a compromise on an objective such as the Recovery Fund which, from a promise, has become a proposal whose necessity and urgency have been recognised by European leaders.
National governments have run aground on the Recovery Plan, asking the Commission to draw it up. What do you expect? What relationship should the Plan have with the EU budget? How much should this budget amount to according to Italy? And how should it be financed?
I would like to say that it is a success that we are discussing how to jointly finance the so-called Recovery Plan. Before we demanded that it be put on the table, it was not even discussed. If it were not a step that meets with a lot of resistance from some countries, the strong pressure that Italy - together with other member countries - has exerted within the Eurogroup and the European Councilwould not have been necessary. Of course, there are different views. The European Council of last 23 April unanimously gave a clear mandate to the Commission to submit a concrete proposal for an ambitious European plan for economic recovery, stressing its necessity and urgency.
We await the proposal from the European Commission in a few days' time. The funds will probably be fully operational and managed within the European budget, but the Italian position is clear: the programme must be ambitious in terms of resources collected on the markets, it must primarily finance the sectors and countries most affected by the pandemic, it must provide for the availability of part of the funds in advance of January 2021 (the so-called frontloading). On these aspects, the Italian position coincides with that of many other Member States.
Member States are arguing on how to finance a plan of a further EUR 1-1,5 trillion. How did you personally experience the clashes with Rutte at the European Council? Italy asks for Eurobonds: which institution should issue them, for what amount and with what guarantees and resources? What should they be spent on and who should manage them?
We believe that Europe is facing a moment of historic importance and that an ambitious and courageous decision is not only timely but necessary today. And I am not saying this from the point of view of Italy, I am also saying it from the point of view of the Union. Our economies are intimately linked. My disagreement with Rutte is based on my conviction that we cannot react to this crisis along the lines of 2010. Now it is a question of looking to the future and not repeating the mistakes of the past. There are several technical hypotheses under discussion. Over and above the solution that will eventually be chosen, there are a number of fixed points for us: funding must be provided on a long-term basis so that the weight of the exceptional but temporary fiscal effort now borne by the Member States can be spread over time; resources must be given primarily to the states most affected and must include a very significant proportion of grants, while not wanting to exclude loans; the states must be responsible for allocating them within a clear framework of common rules.
The EU has approved a package of 540 billion between old and new instruments. If the conditionality of the new ESM credit line will only cover the use of funds against the pandemic and its loans will be at rates lower than those Italy pays on the markets, does the government intend to abandon it?
The package including EIB, Sure and ESM is an important step towards sharing the costs of the pandemic between EU countries and for a common recovery strategy. However, it is still insufficient. The strengthening of EIB guarantees and the introduction of SURE - a European unemployment insurance scheme - proposed and supported by Italy in the past, are decisions we strongly support. On the new ESM credit line, as I have repeatedly said, we remain very cautious. The instrument has been designed for asymmetric shocks and is set within a framework of rules that reflects this origin. The Eurogroup clarified that the surveillance regime normally associated with ESM credit lines will not be applied to the pandemic credit line. In any case, it will be up to the Italian Parliament to decide whether or not it is Italy’s interest to activate it.
Italy was the first EU country affected by the pandemic. But others have been quicker in delivering liquidity to businesses and citizens. What is the government doing to accelerate? The new bridge in Genoa was built in derogation of the Procurement Code, using only European standards. Could this choice be generalised to encourage recovery?
The Government wants to meet the challenge of administrative simplification and reduction of bureaucratic requirements. For this reason, already in the next law decreeof support to the economy, we will introduce a simplified mechanism for the disbursement of the redundancy fund in derogation, fundamental for large categories of workers. But - more generally - we are working on a package of courageous interventions, to reduce the time needed to carry out public works, especially infrastructures, and to cut bureaucracy. This is the first step in a broader reform process, which will take time. For this reason, too, we are thinking, at least for a specific sample of works, of using simplified authorisation procedures, without this leading to stricter controls.
Macron proposes a 'sovereign' Europe, especially in economics. For Germany, this requires the simultaneous launch of political union, i.e. a path towards the Europeanisation of the force de frappe and the French seat at the UN. What is Italy's position?
I believe that a crisis such as that of Covid-19 requires an update of the terms of the debate among the Member States on the type of Union that allows to preserve pillars, such as the Single Market and Schengen, and fundamental principles, such as solidarity. We find ourselves, in essence, both having to protect the principles and pillars of the European Union as we have known it for decades, and to note that, without further integration, the European Union runs the risk of not being competitive and resilient as a global player. I would add that these are issues that require a contribution from all Member States and that this crisis confirms that they can no longer be postponed in the name of a "minimalist" approach to Europe.
May 9 is Europe Day, because in 1950 Schuman proposed the first Community "as a first step towards a European Federation". After 70 years, where are we? Does the Conference on the future of Europe still make sense, or would it be better to launch immediately a Convention for the reform of the Treaties? What reforms would Italy like to see in order to give concrete answers to its citizens?
Italy has promptly called for a Conference on the future of Europe open to an effective consultation of European citizens and Parliaments, including national parliaments, and a debate on the improvement and simplification of the decision-making process within the EU and on the priorities for the EU in the coming years, such as the European Green Deal, the completion of the Economic and Monetary Union, the European government of migration.
This emergency is challenging Europe and all of us, first and foremost, to counteract in a timely and effective manner all the negative economic and social consequences that are occurring. Reflecting on the future of Europe, it would be good if we were to immediately weave a reformist perspective on both policies and decision-making processes. As for the former, it is essential for the EU to focus on the central priorities for future generations: I am thinking of the European "Green Deal"; economic policies genuinely geared towards sustainable and inclusive growth; the completion of Economic and Monetary Union inspired by a full balance between responsibility and solidarity, for example in macro-economic stabilisation and fiscal policies; multi-level governance of migration flows. As far as decision-making processes are concerned, it is essential to ensure an effective power of legislative initiative for the European Parliament, also with a view to accountability in relation to institutions and citizens. It is no less important to make progress on the existing options for simplifying the Council's decisions and on forms of citizens’ involvement with full transparency in the elaboration of policies, an objective that is fundamental, especially towards the young people of our continent.