Italy’s finance minister triggered a political storm on Friday as he signed up to a eurozone rescue deal that involves the region’s European Stability Mechanism bailout fund, a politically toxic prospect in Rome.
Roberto Gualtieri was among the ministers who signed up to a €500bn economic package late on Thursday night in a deal that was hailed as a major breakthrough in the battle against the economic pain wrought by the coronavirus-related lockdowns.
But he and Prime Minister Giuseppe Conte faced an immediate backlash as details of the arrangement emerged. Italy did not win any explicit reference to the concept of “coronabonds” — jointly issued debt underwritten by eurozone member states — yet at the same time it agreed to a package that contains a role for the ESM, which is viewed with deep suspicion in Rome.
Mr Gualtieri’s compromise was heavily criticised by not only the opposition League party of Matteo Salvini, which denounced the minister as a “traitor” and called for a vote of no confidence, but also the Five Star Movement, which shares power with the centre-left Democratic party that the Italian finance minister belongs to.
“We do not accept the ESM now and won’t accept it in the future . . . it is an unsuitable tool to face this crisis and is very dangerous,” Vito Crimi, the political leader of Five Star, said in an interview with Italy’s state-owned Radio 1.
Thursday’s breakthrough on immediate economic measures supporting businesses, workers and sovereigns was achieved after the Dutch government backed away from previous demands that ESM lending be made subject to tougher macroeconomic conditions.
The core elements of the package are revised pandemic credit lines from the ESM that will be available within two weeks, a boost to the lending capacity of the European Investment Bank and a new €100bn unemployment insurance scheme proposed by the European Commission.
Ministers also agreed on setting up a “temporary, targeted” recovery fund to help trigger a post-lockdown economic rebound, but they have yet to settle key questions on the size and sources of funding for the tool, or indeed when it will be set up.
The very inclusion of the ESM remains politically dangerous in Italy; Eurosceptic parties have long claimed the fund would impose draconian conditions in return for any lending to embattled sovereigns. Reacting to the deal, Mr Salvini in a tweet: “I’m horrified and I will ask for the resignation of an economy minister who has sold off our country.”
For his part, Mr Gualtieri expressed satisfaction for the result Italy obtained after it “fought a tough battle”, saying the criticisms of the deal were “ridiculous”. The deal meant that conditionality for the use of ESM financing was “off the table”, he argued. What is more, Italy had not given up on the idea of eurobonds.
