MNI: Italy To Delay ESM Vote Until After Summer - Sources

The Italian government will delay a parliamentary vote to ratify changes to the European Stability Mechanism treaty until after the summer as Rome continues to lobby the European Union over its fiscal rules and EUR200 billion in funding for Italy’s National Recovery Plan, parliamentary sources told MNI.

While the centre-left opposition Democratic Party has tabled a bill to ratify the treaty changes, to be debated on June 30, the government plans to use its parliamentary majority to ensure any vote is delayed for several months, the sources said.

More than two years after their approval by the EU, Italy is the only country yet to ratify the changes to the treaty, holding up the creation of a backstop for the Single Resolution Fund which would be key in any future banking crisis.

Despite pressure from Brussels, Prime Minister Giorgia Meloni said two weeks ago that Italy wants to see how the EU will overhaul its fiscal rules before it ratifies, as Rome pushes for easier limits on borrowing under the Stability and Growth Pact in drawn-out talks among the bloc’s members. (See MNI:Frugals Open To EU Debt Compromise, Spanish Presidency Key)

In addition Italy will need EU approval for a redesign of its post-Covid National Recovery Plan to ensure that it receives a total EUR200 billion of aid from the NextGenerationEU programme. (See MNI: EU Asks Italy To Speed Up National Recovery Plan Overhaul)

BARGAINING CHIP

“There is no countdown for the vote and it can be postponed,” said one of the sources, noting that the government could issue decrees to delay ratification in both chambers of parliament.

But even as Meloni has used ratification as a bargaining chip, sources say that she and Finance Minister Giancarlo Giorgetti would eventually like to see the change to the treaty approved, something which is still resisted by many of the right-wing governing coalition’s parliamentarians. Opposition to ratification is found in both Meloni’s Brothers of Italy party and in the League to which Giorgetti belongs.

“It’s more a division between government and parliament rather than within the coalition,” a government official told MNI.

Trying to win over their parliamentarians, Meloni and Giorgetti have in recent months pushed for changes to the ESM to make its assistance programmes more focused on investment, but they have had no success despite two visits to Rome by the facility’s chief.

Coalition parliamentarians abstained from a vote on the bill in parliament’s Foreign Affairs Committee on Thursday, though they could have stopped its progress by voting against it. The Committee had earlier requested a technical opinion on the ESM ratification from the finance ministry, whose Chief of Staff Stefano Varone responded by saying that it could have a positive impact on Italy’s sovereign debt rating and lead to an “improvement of market financing conditions.”

Coalition parliamentarians were nonplussed. The League’s leader, Deputy Prime Minister Matteo Salvini called the document “a technical opinion” that did not necessarily express the political view of the government or of the finance minister.