MNI SOURCES: Italy, France Ready Bilateral EU Reform Treaty

--Neighbours Look To Build On 'Med League' Talks, Push Common EU Goals

By Silvia Marchetti

     ROME (MNI) - Italy and France are set to launch a bilateral treaty that

enhances cooperation in addressing shared European challenges, paving the way to

a new Rome-Paris reform axis, government sources have told Market News.

     According one one senior government official, Italian prime minister Paolo

Gentiloni and French president Emmanuel Macron are expected to meet for

bilateral talks in Rome later Thursday, to expand on discussions held with other

leaders from the European Union's Mediterranean region on Wednesday. 

     "We are very satisfied about this renewed excellent cooperation that leads

to the birth of a strong Rome-Paris engine able to drive crucial EU governance

reform objectives such as common financing for defence and security,

immigration, and burden-sharing at all levels," said the official, who is

closely following the talks.

     The leaders found solid common ground at the Mediterranean League summit in

Rome  and will now hold further talks on Europe's reform process.

     The source however argued that Italy's goal was a partnership with France

that was "inclusive" rather than "exclusive", open to other members willing to

team up to give Europe an adequate makeover.

     The new agreement, dubbed the "Quirinale Treaty", is expected to be

officially launched at the France-Italy bilateral summit in September, said the

source.

--SHARED GOALS

     The official stressed that much unites the neighbours. Both are pushing for

an EU-level public backstop to tackle financial crises across the bloc and for

the completion of the banking union with the implementation of the so-called

"third-leg", the common deposit insurance scheme.

     Additionally, both Rome and Paris are against imposing a cap on the amount

of sovereign bonds that can be held by banks and ending the zero-risk era for

holdings of treasury securities.

     Above all, their alliance is reinforced by shared concerns over their

fiscal positions and unstable finances, which are constantly under scrutiny by

Brussels.

     Rome and Paris are both pushing for a more growth-oriented Europe, with

less austerity. Their common fiscal agenda is therefore in contrast with

Germany's more orthodox stance.

     In the wake of the German political crisis and of Italy's increased

credibility on the European stage, Italian officials believe Macron will be less

pivoted towards Berlin and more pro-Rome in his outlook.

     "Germany's stalemate in forming a new government stands as a window of

opportunity for enhanced French-Italian ties in pursuing European reforms," said

Democrat senator Maria Spilabotte.

--ITALY'S RENAISSANCE

     Italy has gone from being a "doppelganger" for indebted Greece, ready to

collapse at any moment under the weight of public debt, to a credible partner

that meets its fiscal and reform commitments and deserves to be one of Europe's

top players and leaders, Spilabotte noted.

     According to Democrat deputy Michele Bordo, president of the Lower House's

EU Affairs committee, "strengthening French-Italian relations is paramount to

boost convergence, rally consensus for change across the whole bloc and save the

European project".

     The Italian government sees Paris as a strong ally with whom to pursue

pro-growth investments and innovation policies in Europe, whilst jointly

tackling the immigration problem, Bordo said.

     Macron is well aware that Rome has become the main interlocutor with Libya

and other African authorities in slowing the flow of migrants.

     "For too long, Italy was left alone in facing the immigration crisis. Now,

finally, we have a key European player backing us," added Bordo.

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

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