Europe, anti-pandemic aid and papocchi
The analysis of the columnist Guido Salerno Aletta for Teleborsa
We are facing the first obstacle: States have to prepare their budgets for 2021 without knowing exactly what will happen to the NGUE ( Next Generation Eu ), given that it has not yet been approved. The states can only rely on the scheme agreed last July between the Council and the Commission, which, however, was neither approved by the European Parliament nor by the individual states. And it is a mess, given that in 2021 each state should be granted 10% of the total amount of "grants" assigned. We therefore risk spending resources that perhaps will arrive later and which in any case must be financed by the States by increasing the Union's own resources overall. Nobody knows exactly how much this "grant" will cost Italy.
As if that were not enough, there is a paradox: when the Union presents itself on the capital market, boasting a rating of AAA, it displaces the issues of states such as Italy that have a lower one. It has already happened with the issuance of loans aimed at financing the SURE: preferring European bonds to Italian ones, the spread has risen to our detriment. Practically, Italy has created a competitor that displaces us.
The chaos increases, because we begin to worry about the future: the pandemic will not last forever, but the debt incurred by the states will remain an ineliminable burden.
It seems impossible to reduce it with the criteria of the Fiscal Compact, which is based on structural balance and the primary surplus that leads to a progressive reduction of the debt / GDP ratio.
There are those who have proposed, as did the President of the European Parliament David Sassoli, that the ECB substantially proceeds with the cancellation of government bonds purchased with the PEPP (Pandemic Emergency Purchase Program): but it is an impracticable proposal with the current Treaty, that since the time of Maastricht has prohibited the ECB from providing any financial support to states. And in fact, the PEPP; as the QE decided in the days of Mario Draghi, it is presented as an instrument aimed exclusively at achieving an inflation rate “close to but not higher than 2% per year”. One of the fundamental pillars of the European monetary constitution would fail, one of the conditions that allowed Germany to abandon the mark to adopt the euro.
Then there is the question of the ESM, an unused instrument, which according to the former Prime Minister Enrico Letta should be dismantled as it is now a residue of the approach followed to tackle the crisis of 2010: the Fund should be dissolved and the capital already paid by the States within the EU, this would thus have the ability to borrow independently without having to ask the States for other guarantees.
As if all these problems weren't enough, French President Emmanuel Macron has just released an interview in which he states that with the pandemic we are facing a "fracture of capitalism" and that we must face the consequences in geopolitical terms: Europe must immediately give its own army, becoming independent from the NATO shield. The UN must also be refounded.
In short, everyone has their say rightly: the Union is a mysterious animal.
In May, Italy turned to Europe for help: instead of strengthening the Union's role, it may have triggered the process of its disintegration.
(Extract of an article published on Teleborsa; here the full version )
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/leuropa-gli-aiuti-anti-pandemia-e-i-papocchi/ on Sun, 22 Nov 2020 07:14:53 +0000.