MNI SOURCES: Italy Wants EU Current Account Surplus Crackdown

By Silvia Marchetti

     ROME (MNI) - Italy wants tougher European rules to crack down on large

current account surpluses like Germany's and an EU-wide employment fund of which

Rome would be a net beneficiary, government sources told MNI.

     "Current EU rules require countries to stick to a 6% current account

surplus in relation to GDP but Berlin has steadily exceeded this level for years

without any consequence. We need to introduce a new mandatory threshold within

the Growth and Stability Pact with clear sanctions in case of breach," said a

source tied to the co-ruling League party.

     Rome is confident upcoming European parliamentary elections will deliver a

more lenient European Commission and give Italy more negotiating power to amend

treaties and change budget rules.

     "Berlin's excessive surplus, one of the largest in the world, is just as

bad as a high debt or deficit. It has the same potential for triggering

macroeconomic imbalances and negatively impacting on the entire eurozone's

economy," said the official.

     German's dependence on exports, which are fuelled by controlling wage costs

and have eroded Italy's own exports of products such as cars, is sapping

eurozone inflation, the Italian government argues.

     "Let's face it: Berlin has been deliberately keeping wages low in the

country and this is the main reason why inflation in the eurozone is still below

2%", said a source with ties to the 5-Stars Movement, the League's coalition

partner.

     --BENEFITS SHARING

     According to Rome, the Commission has turned a blind eye to Germany's

surplus, while picking on southern European countries for breaking EU fiscal

rules.

     European parliamentarians from both the 5-Stars and League parties are

already rallying consensus among other anti-austerity EU supporters in Brussels

for Italy's rule proposals.

     Rome also intends to review the way European structural funds are assigned

to member states by setting up a Europe-wide scheme for unemployment subsidies

based on "benefits sharing."

     "The Lisbon Treaty's goal is to create a social EU dimension and boost

employment but we are far from such target. Having zero employment is often more

important than tightening budgets in hard times," said the 5 Stars source.

     In Rome's view richer countries with high surpluses and good employment

levels would become net contributors to the fund whereas more vulnerable members

such as Italy, where unemployment is above the EU average, into net

beneficiaries. Italy is currently a net contributor to the EU budget.

     "There's a big fuss at EU level over risk reduction and burden sharing, but

what about sharing excessive economic benefits? That's also solidarity," noted

the League official, arguing that Berlin's "predatory commercial policies" were

also partly responsible for low employment across the bloc.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: MFIBU$,M$E$$$,M$G$$$,M$I$$$,M$X$$$,MC$$$$,MT$$$$,MX$$$$,MFG$$$]