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

MNI (London)
--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
[TOPICS: MFIBU$,M$E$$$,M$I$$$,M$X$$$,MC$$$$,MI$$$$,MX$$$$,MFX$$$,MGX$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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