MNI: Italy Struggling To Meet H1 Targets For EU Cash-Officials

Italy is set for another struggle to meet target dates to pass reforms needed to unlock EUR19 billion in NextGenerationEU funds, and end-of-year objectives look even more challenging as it becomes harder for Prime Minister Mario Draghi to keep his coalition together, sources close to the matter told MNI.

With a backlog of laws and decrees building up in parliament, Draghi is increasingly frustrated, and willing to use confidence votes to force them through, sources said. While defeat in such votes is unlikely, the parties supporting his technocratic government are becoming harder to control ahead of June 12 local elections and national elections in spring 2023, and the chances are rising that one of the bigger groups will walk away, they added.

Achieving the 38 targets by the June 30 deadline for the next tranche under the NextGenEU pandemic response programme is looking tough, said Luca Dal Poggetto from Open PNRR, which monitors the implementation of the National Recovery Plan agreed by Italy as a condition for the European money.

A delegation law for a new procurement code, drawing up a strategic environmental waste plan and calling tenders for public projects pledged to buffers could all miss the deadline, said Dal Poggetto.

YEAR-END TARGETS HARDER STILL

Harder still to achieve will be the 51 targets set for the end of the year, he said, pointing out that the government could run the risk of awarding poor quality contracts for public projects in its hurry to get things done. At the current rate, some public projects may only have a month to find contractors, he said.

Italy also came close to failing to meet its NextGenEU targets at the end of 2021, leading to an extended four-month approval period before Brussels delivered an earlier EU20 billion tranche. The government’s struggles to approve reforms have also made it more difficult for Italy to argue for more European cash as it faces huge bills to reduce its energy reliance on Russia. (see MNI SOURCES: Italy Seeks EU Cover For Borrowing As Yields Rise)

A key target for the end of this year is an overhaul of the country’s competition regulations, which requires a long list of implementing decrees to be put into law, a process which sources said would take at least six months. Initially approved by the government on Nov. 4, the competition reform is currently blocked in the Senate’s Industry Committee, and, while Undersecretary for the Council of Ministers Roberto Garofoli is still trying to broker a deal to move it forward by the end of May, Draghi has declared a deadline of today for an agreement.

The threat of a confidence vote may weigh heavily in this case, as if deployed it would mean the competition law would revert to the format in which it was originally sent by the government last year, without amendments later inserted by parties to favour local government enterprises.

FIVE-STARS

But such heavy-handed tactics by Draghi could backfire. Parliamentarians from either the right-wing League, or, more likely, the populist Five-Stars Movement, could be provoked into abstaining or voting against a confidence motion, ending their support for the government at least temporarily, a senior official from the centre-left Democrat party told MNI.

“Nobody wants early elections, but the government can survive without one of these two [the League or Five Stars],” the official said, adding “If one jumps the other has to stay.”

Another senior official said that the Five-Stars leader, former prime minister Giuseppe Conte, may decide to withdraw his ministers from the government in order to strengthen his shaky grip on his party. While it is not clear that Conte could command sufficient support for such a move, the official noted that Five-Stars initiatives are regularly ignored by Draghi and his team.

“We can’t continue like this,” the official continued.

A spokesperson from the prime minister told MNI that the process within the industry committee was a “parliamentary negotiation” between parties.