MNI: Italy 5 Star Pledge To Dismantle ESM, Boost Sovereignty

--Need To Sideline ESM's "Troika" System

--MTO Balanced Budget Rule Must Be Scrapped

--Mixed Messages On EU Seen Showing Lack of Expertise

     ROME  (MNI) - Italy will aim to recover sovereignty in Europe by overseeing

the dismantling of the European Stability Mechanism and many other EU treaties,

according to the governing manifesto of the poll-topping 5 Star Movement

     The anti-establishment group, who picked up 32.7% of the vote in the Mar 4

election, likely making them a central pillar of the next government, has

sent-out mixed messages on its plans for the European Union. 

     Recent reassurances from Luigi di Maio, 5SM leader and candidate for

premier, that his party is neither extremist nor anti-Euro, are at odds with the

contents of their electoral program, which was approved online by supporters. 

     As coalition negotiations continue, all 5SM party members are in a purdah

phase, turning down requests to clarify the movement's position.

     "We're facing a very delicate, tricky moment ... preparing for government

talks, so all mouths are shut," a source close to 5 Star told MNI. 

     --LIGHT ON DETAIL

     The manifesto, which overall offers little concrete on reform of eurozone

governance, states that the European Stability Mechanism, set-up in the wake of

the financial crisis, needs be dismantled. According to 5SM, the ESM only serves

the purposes of the so-called Troika -- the European Commission, the European

Central Bank and the International Monetary Fund. 

     Five Star want to end the 3-pronged scheme, which, in their view, dealt

negatively with the fall out from the debt and crises and recessions of the last

decade.  

     The ESM should be abandoned in order to "free countries from the need to

abide to the rigorous conditions imposed" at a higher level, the manifesto says.

     Alongside pro-growth reform and easing of austerity, other EU reforms 5SM

look for are the elimination of both the 3% deficit-to-GDP threshold and of the

medium-term objective (MTO) of a structural budget balance. 

     The latter is not only enshrined in Europe's Stability and Growth Pact, but

also a law inserted in Italy's constitution. 

     The conflict between the EU's rich north and poorer EU periphery is at the

basis of the movement's proposal to create a "southern alliance" to invert the

balance of power. 

     If most European treaties aren't revised, or, abolished, Italy will

"continue to produce a low-cost workforce for the rich north EU countries,

turning into a tourist playground for the rich northerners," the manifesto says.

     --LACK TECHNICAL KNOWLEDGE   

     According to Paolo Manasse, economics professor at Bologna's University,

5SM aims to dismantle the ESM because seen as a weapon of dominance in Europe's

hands. 

     "The funds that are granted to ailing member states, like in the case of

Greece, are perceived as a way to keep those countries constantly under

pressure, as in a state of duress just because they're getting the money -- 5SM

want to be unleashed from all constraints," he said. 

     Looking forward, Manasse says 5SM's intentional ambiguity on these issues

during the electoral campaign is counter-productive now that they aim to govern

Italy. 

     "True, parties always promise one thing then do another. But my feeling is

that 5 Star still have no clear idea, nor professional or technical background,

on what European issues, rules and priorities really are. That's a large

know-how they still lack and need to acquire," he added. 

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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