Brussels’ latest trap: the Eurobond, or the new version of the ESM

The always excellent Giuseppe Liturri on La Verità warns us of the umpteenth trap set by Brussels for the little, very little, democracy that remains in Europe: the European Commission is about to unveil a plan that could turn out to be yet another dramatic squeeze on the financial sovereignty of member countries, Italy first and foremost. While preparations for the multiannual budget framework 2028-2034 are underway, a joint debt mechanism is looming on the horizon, presented as a solution to future crises, but which many see as a “new ESM in disguise”.

This is not a simple bureaucratic adjustment. It is a bold move that aims to create a permanent channel for the issuance of eurobonds, allowing the EU to provide loans or subsidies to member states in case of emergency. Approval? It requires the unanimity of the 27 countries, a seemingly insurmountable obstacle, but which, as history teaches, Brussels knows how to skillfully overcome by "wielding the club of the emergency of the moment (Covid, climate, war …)". The "Financial Times " itself anticipated this draft, calling it a way to "replenish the 2028-2034 budget". That is, a way to raise money, and keep a few tens of thousands of useless bureaucrats at the expense of citizens. Here Milei's chainsaw would be far too little.

The Ghost of the ESM and the Dangerous Loss of Autonomy

The parallel with the controversial European Stability Mechanism (ESM) is disturbing. Currently, the ESM allows states to access loans, but at a very high price: the country ends up under a “macroeconomic adjustment program” and loses all “room for manoeuvre in its economic policy”.

Greece knows something about it. The new proposal of the Commission would seem to replicate this scheme, although formally without the stringent conditions of access and the surveillance program of the ESM. The objective, however, remains the same: "to definitively place under guardianship the economic policy choices of the Member States", through a common debt that, among other things, would violate the European treaties themselves (but by now we are used to it and they are worth less than the paper they are written on.

Italy, a Series A and a Series B Debt: The Real Risk

But why should Italy, with a public debt of 2,556 billion euros as of April 30, submit to loans from a supranational institution when it can self-finance at almost the same price on the markets? Italy is already in debt to Brussels for 103 billion (between SURE and NextGenEU). These sums enjoy a repayment privilege compared to the rest of the debt . Further increasing this exposure would create a dangerous series A debt and a series B debt, with the concrete risk of serious damage to the rating of our BTPs, exactly as happens for the ESM.

The argument that EU debt is less expensive than domestic bonds is, according to the article, without merit. Currently, the 10-year BTP costs only 50 basis points more than bonds issued by the Commission and just 20 points more than French bonds. Accepting loans from Brussels would mean admitting that one has lost access to the markets, with all the foreseeable consequences. Those 50 basis points of difference are a trifle compared to the cost of the gigantic bureaucratic monster, of controls and of EU loans. Then what would this money be used for? To relaunch the Italian economy? Not really.

A Trap for Spending Autonomy

The experience with Next Generation EU has already taught a bitter lesson: once those loans are received, they are "spent as Brussels decides", regardless of the real effects on the growth of the country. Money is borrowed, that must be returned, but not to spend it on what we need, but for purposes that have nothing to do with the well-being of citizens and the growth of the country, exactly as happened with a good part of the PNRR.

The Resistance and the Tactics of the “Ballon d'Essai”

Despite the growing demands of defense and economic competitiveness pushing for new solutions, countries such as Germany, Sweden and the Netherlands are firmly opposed to a new common debt to provide subsidies. Germany, in particular, considers subsidies “an insurmountable limit”. However, the issuance of “back-to-back” loans for defense is less controversial. The negotiation promises to be arduous, complicated by pressure to increase national defense spending and by the resistance of “net contributors” (including Italy) to increase national contributions.

Liturri rightly points out that the Financial Times leak is, almost certainly, a “classic trial balloon”, a tactic theorized by former President Jean-Claude Juncker: “We decide something, then we make it public and wait a bit to see what happens. If there are no protests or riots because most people don’t even understand what has been decided, then we move forward, step by step, until there is no turning back”. A tactic that doesn’t give a damn about treaties, democracy, people, only at the service of those thousands of rich, fat, Brussels bureaucrats with salaries starting from five figures.

Refuse the danger

Italy should abhor and reject these plans, right away, and it would not be alone. Compatibility with the European Treaties and, above all, with the German Constitution and the limits established by the Karlsruhe Court, is already an argument that should be enough to stop these plans.

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The article Brussels' latest trap: the Eurobond, or the new version of the ESM comes from Scenari Economici .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/nuovo-debito-ue-sovranita-italia/ on Sat, 05 Jul 2025 10:17:57 +0000.