MNI SOURCES: Italy, France Prepare Call For EU Fiscal Boost

A bilateral treaty between France and Italy set to be signed as early as next week is likely to include a joint call for an expanded eurozone fiscal capacity and for the completion of Europe's banking union, sources close to the matter told MNI.

The so-called "Quirinal Treaty", still being drafted and modelled on the landmark Franco-German Elysee treaty from 1963, will also include references to state aid, Europe's fiscal rules and bilateral coordination of economic policy, sources said.

Italy and France share common ground on the borrowing and debt rules contained in the Stability and Growth Pact, reform of which is now being considered in European Union talks expected to last into next year, as well as on the need for some sort of new EU permanent lending facility, Finance Ministry sources said. Italy has already pressed for the inclusion of a new lending facility in the fiscal talks, as MNI has reported. (See MNI: Italy Wants Permanent Lending Facility In EU Debt Talks)

MACRON, DRAGHI RELATIONSHIP

Italian President Sergio Matarella has been key in negotiating the treaty, meant to boost bilateral ties after a period of tension during previous governments run by the populist Five-Stars Movement and the hard right League. The close personal relationship between Italian Prime Minister Mario Draghi and French President Emmanuel Macron has added further momentum to talks on the pact, which will require parliamentary ratification and will also touch on topics such as migration and defence.

Both Italy and France have been arguing for an increased European Union lending facility for some time, a Brussels-based European Union official told MNI, adding however that it will be crucial to see how much the two countries tie this position to the ongoing talks on reforming the Stability and Growth Pact. France will also take over the rotating presidency of the EU on Jan. 1.