In a post published on Facebook on Wednesday, Italy’s Prime Minister Giuseppe Conte tried to unite the country’s governing parties over the use of EU’s bailout fund, as the coalition parties are divided on whether to use it or not for the country’s recovery from the Coronavirus crisis.
Italy has long been opposing to the use of the European Stability Mechanism (ESM), due to the strict fiscal conditionality it would require in other circumstances. However, during Eurogroup’s meeting on April 9, Eurozone’s finance ministers agreed to a half-a-trillion Coronavirus rescue package, that includes the use of ESM’s credit lines for member-states.
After dozens of hours of bilateral negotiations with the Portuguese finance minister and President of the Eurogroup, Mário Centeno, the Netherlands agreed on “light conditionality,” provided that the mechanism is used to “support domestic financing of direct and indirect healthcare.”
The 5Star Movement, which is the largest force in Italy’s governing coalition, opposes to the use of ESM due to fears that further conditions could be attached later on, and which would mean austerity measures for Italy. The party’s fears are echoed by Matteo Salvini’s right-wing League, while the second-largest party in the coalition, the centre-left Democratic Party (PD) is, on the contrary, backing the use of ESM, citing that Italy is one of the worst-hit countries by the pandemic and that “it would be self-defeating to decline it.”
“My position has been very clear from the beginning,” Conte said, labelling the ESM mechanism “inadequate and even insufficient,” to respond to the unprecedented challenged posed by the Coronavirus emergency.
However, any discussions on the conditions now would be “a merely abstract and schematic debate,” Conte said, adding that the contract conditions “will be judged at the end,” whilst pledging that the parliament will have the last word on the matter.
EU leaders will hold a virtual meeting next week, on April 23, to discuss the measures to tackle the economic turmoil caused by the Covid-19 pandemic, with Italy expected to clarify its position on whether an ESM loan is in the country’s interests.
