MNI:Italy Prepares Drive To Ratify ESM Treaty Change-Officials

The Italian government is preparing a renewed push to secure the long-delayed final ratification of a change to the treaty governing the European Stability Mechanism, which would help clear the way for the ESM to start a borrowing drive to fund its EUR68 billion backstop for the Single Resolution Fund, government sources told MNI.

Italy is the only eurozone country whose parliament has still to ratify the treaty change, but the Finance Ministry is now working on final details of a ratification law to be presented in the coming weeks, with an announcement expected from Finance Minister Daniele Franco in parliament later on Wednesday.

The move would enable Prime Minister Mario Draghi to point to at least some meaningful progress on the ESM when he attends a meeting of European leaders next month in Paris, at which changes to the bloc’s rules on borrowing contained in the Stability and Growth Pact will also be discussed, the sources said.

Final ratification of the treaty change by Italy and Germany would clear the way for the ESM to raise the money it needs to fund the Single Resolution Fund backstop, sources said.

Draghi had avoided tackling the politically challenging ESM ratification process during the first year of his premiership, towards the end of which he needed political support for what turned out to be an abortive bid for the national presidency.

COALITION TENSIONS

While the prime minister’s broad coalition should give him the numbers to gain approval, tensions within his government are likely. The hard-right League is against the change to the ESM treaty, arguing that it would impose more difficult conditions on countries in need of aid, while the Five-Star Movement, which has previously opposed the treaty change, could also see a minority of lawmakers vote against it, sources in the populist group told MNI.

The only other country not to fully conclude the ratification process is Germany, where a court is due to rule on the treaty change soon. EU officials, some of whom have expressed concerns over the delay in Italy, told MNI they hope that both Italy and Germany will have fully ratified by the summer.

The government will send the draft law to parliament’s Foreign Affairs Committee, before it is later submitted for approval by both houses. There is a risk the process will be delayed if other parliamentary committees seek involvement, the sources said.

While Italy’s Foreign Ministry initially handled the ratification in December 2020, the Finance Ministry and the office of Prime Minister Mario Draghi are leading the process now, an official said.

The president of the Foreign Affairs Committee in the House of Deputies, Piero Fassino, told MNI that he had yet to hear that a draft law was about to arrive.