I’ll tell you about the somersaults of the banker Bini Smaghi on the EU Stability Pact
What the former member of the executive committee of the ECB and current president of the French Société Générale, Lorenzo Bini Smaghi, wrote on the reform of the Stability Pact, much surprisingly. The deepening of Giuseppe Liturri
In Corriere della Sera on Saturday it seemed to read the observations of a dangerous Eurosceptic. Instead we read Lorenzo Bini Smaghi – economist, current president of Société Générale and member of the executive committee of the ECB from 2005 to 2011 – all intent on underlining the dangers for Italy deriving from the reform of the Stability Pact. We recall that the Commission proposal, which should apply from 2024, dates back to early November.
Before going into the details, let us note – without wishing to prejudice the author by this sin – that his passage to the ECB was characterized by two untimely rate hikes in 2008 and 2011 and, above all, by the famous letter dated August 2011, jointly signed by Mario Draghi and Jean-Claude Trichet, with which the Berlusconi government was de facto commissioned and favored its fall. The economic policy prescriptions of that letter, slavishly applied under the blackmail of the spread, were the main cause of a decade of asphyxiated growth in our country.
The Florentine economist – not since today critical of the Pact reform projects – focuses on four aspects of a “political” nature, which he says have been neglected in the debate and analyzed in more detail in a recently published paper .
The particular attention dedicated by the reform to countries with public debt deemed " at high risk" , including above all Italy, which would end up being the main recipient of the new rules, is underlined. So he denounces the application asymmetry.
The second aspect concerns the overwhelming power conferred on the Commission to define the debt reduction path in 4-7 years. A further heavy conditioning of the practicable space of national decisions, which would end up compressed without an adequate democratic legitimacy previously conferred on the Commission by the Treaties.
The third aspect is that of the imposition of a ceiling on public spending, once again particularly penalizing for Italy.
The fourth aspect is the disciplinary one. Which the reform strengthens by being able to suspend the disbursement of European funds (including Next Generation EU) for non-compliant countries.
In his opinion, this reform improves nothing of what can be improved and introduces further distortions and only creates " a more stringent external constraint ". His idea is that it is sufficient to change the path (envisaged by the Fiscal Compact treaty, not by the regulations of the Stability Pact) which requires the reduction of debt exceeding 60% of GDP, in installments of 1/20 per year. It would be enough to halve it, concludes Bini Smaghi who underlines the ability of the current Pact to allow for an orderly reduction of the debt.
What's wrong? Bini Smaghi's remarks can be found in interventions by other economists (Francesco Saraceno, Gustavo Piga and Stefano Micossi, among others), therefore the claimed particular originality of the intervention cannot be glimpsed.
More surprising is the alleged willingness to assume the role of those who steal the arguments from the "sovereignists" (anything, that is, nothing, it means). As if highlighting the defects of the European construction is an exercise to be subtracted from dangerous "bad guys" and should be reserved for the "good guys". The passage highlighting the merit of the Berlusconi government for having blocked a Commission proposal similar to the current one in 2004 is also surprising. To be malicious, it looks more like a " captatio benevolentiae " towards the current government majority.
Finally, the icing on the cake: the refusal of the "external constraint". That is the ideological mantra in the name of which any harassment against Italy has been justified, at least since 1992. The perverse idea that only decisions taken in the European offices, to whose institutions we have always shown prone loyalty, would have allowed us to operate our country. Perhaps Bini Smaghi – the new St. Paul struck on the road to Damascus – will have realized that those decisions have mainly damaged Italy. And he was certainly not in the forefront of opposing them, quite the contrary.
“ Have you read Bini Smaghi today in the Corriere della Sera? What a face! What courage! The former ECB member defends the indefensible. According to him, Europe's problem is not "the alleged German hegemony", but the "weakness of the other member countries". But where does he live? The enlightened banker is missing some steps, such as the Euro, a currency built on the strength of the German economy which has given Germany a strong competitive advantage” .
So in 2014 the current President Giorgia Meloni commented on another editorial by Bini Smaghi on Facebook. Words that remain topical.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/vi-racconto-le-capriole-del-banchiere-bini-smaghi-sul-patto-ue-di-stabilita/ on Sun, 29 Jan 2023 16:27:56 +0000.