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Those who push and those who slow down on the ESM for Defense

1 month ago babelfish

Those who push and those who slow down on the ESM for Defense

Debate not only in Europe on the project of an ESM for Defense. The role of Giorgetti and the puffs in the League (the economist Borghi on X says that…)

At the meeting of Eurozone finance ministers next Monday "there will not be a discussion on any type of amendment to the tasks of the ESM".

This is what a senior European official declared, when asked about press speculation about a possible use of the ESM in loans for the purchase of weapons for Ukraine. “We have negotiated a change to the ESM treaty, the process is still ongoing and we are not about to open a new discussion on that issue”.

The question arose spontaneously since there have been rumors since the beginning of the week that an ESM for Defense is being discussed in Brussels and in Italy the Italian Economy Minister Giancarlo Giorgetti himself is said to be in favor of it.

“Powerful figures in the EU are pushing for the European Stability Mechanism (ESM), worth 422 billion euros, to go beyond its original role of saving economies. It could instead take on the task of distributing low-cost loans to purchase weapons,” Politico revealed earlier this week, citing “five people familiar with the discussions.” And it seems that among the "powerful figures" most active in designing the possible change of clothes of the ESM there is the Italian Minister of Economy Giancarlo Giorgetti" reported on 6 May the newspaper Open founded by Enrico Mentana and directed by Franco Bechis.

Startmag contacted the Mef for feedback, but after almost 4 days it has not received feedback.

What is certain is that decisions on the use of ESM funds, as happened with the support for the pandemic crisis, must be taken unanimously by the board of governors of the Mechanism, made up of the Eurozone Finance Ministers, the same ones who participate in the Eurogroup.

What is known about the ongoing discussions ahead of the next Eurogroup meeting on Monday 13 May?

THE FAVORABLE THRUST FROM PARIS AND THE BALTIC STATES TO THE ESM FOR DEFENSE…

Supporting the idea of ​​using the European Stability Mechanism to finance the expenses that the EU will have to face for common defense are France and the Baltic countries at the forefront, according to one of Politico 's sources.

During Emmanuel Macron's speech on Europe at the Sorbonne last April, the French president hinted that the ESM could finance spending in a number of sectors, without specifying defence.

… AND THE OPPOSITE ONE OF BERLIN AND AMSTERDAM

If the proposal really gains traction, it is bound to face opposition from the Nordic countries. European diplomatic sources explained this to Adnkronos , after the indiscretions reported by Politico.eu . A similar idea is "doomed to failure", for a series of reasons: the first is that it would require a change to the ESM treaty, something that "is not done easily", as seen with the negotiated ESM reform for years in the Eurogroup, in particular under the first Conte government, then finalized by Conte two with the signature of the then Minister of Economy Roberto Gualtieri and never ratified by Italy, we read on Adnkronos.

Therefore, the source continues, "I don't think Germany or the Netherlands would support it", at least not "in the short term". However, given the rapidly deteriorating geopolitical context and in view of the US presidential elections in November, it is true that the problem of how to further finance Europe's defense is certainly among those at the top of the agenda for "all" member countries.

HOW THE EUROPEAN STABILITY MECHANISM WORKS

Furthermore, Adnkronos also reminds us that reforming the ESM treaty requires the unanimity of the twenty eurozone member states in the Council and then ratification by all the parliaments involved, according to the individual national procedures. The length and complication of the necessary legal process is not the only reason that makes this road at least impervious: using the ESM, it is noted, would mean that the twenty countries of the euro area "would pay for the entire EU", given that the Mechanism is financed exclusively by Eurozone countries. An eventuality that appears rather "unlikely", observes the source.

A MONTH FOR DEFENSE SUPPORTED BY GIORGETTI

At the moment there are no reactions from the ESM, reports Ansa .

“The scenario is actually on the table, even if the discussions on the matter are still at an immature stage, informed sources confirm to Open ” the online newspaper directed by Bechis reported on May 6th .

The director general of the ESM, Pierre Gramegna, also floated this idea, suggesting in February that the fund should help countries that are bearing the brunt of Russian aggression, Politico points out. “If countries have financial difficulties or are on the verge of losing access to financial markets due to the war in Ukraine, we need to see… how we can do this,” the ESM number one said in a conference.

However, the general director Pierre Gramegna always focused on the hypothesis of reform, recalling the dialogue "with Italy to find a solution", he said most recently in an interview with CNBC. “But all of these things are fluid and are discussed.” Is this solution therefore a matter of giving a new look to the European Stability Mechanism to support defense spending?

“Everything can be improved, even the ESM”, the Italian Minister of Economy had agreed at the end of December in the aftermath of the Italian rejection of the modification of the European Stability Mechanism, ensuring that the “no” was not a breach with the Europe. So much so that "the minister of economy and finance – declared Giorgetti, referring to his role in government, the day after the vote that divided the majority – was interested in the ESM being approved for economic and financial reasons" .

“However, the Northern League deputy secretary is not a man to lose himself in remorse, and must have started working with his MEF experts to pull a rabbit out of the hat” added Open .

THE POSITION OF THE LEAGUE

Yet Minister Giorgetti's party is one of the most fervent opponents of the ESM.

“The League has never changed its mind on the ESM in twenty years, it is a useless if not harmful tool that would lead to an Italian worker having to put in money to save a German bank. I don't think it's useful and since Parliament is sovereign, Parliament votes based on Italian national interest: the Germans follow German interests, we follow those of Italians. The League's position has always been and continues to be clear." This is what Deputy Prime Minister Matteo Salvini declared, following the failure to ratify the ESM by the Italian Parliament last December.

It was the League and the party of Prime Minister Giorgia Meloni, Brothers of Italy, who voted against the ratification of the ESM. On the other hand, both Meloni and Salvini have never made a secret of their opposition to the European instrument.

THE TWEET OF LEAGUE SENATOR CLAUDIO BORGHI

But if these remain statements from five months ago, today another prominent member of the League – who is also very close to Secretary Salvini – expressed his opinion on the issue of the ESM for Defence.

“But who the heck is the sick person who may have put the idea around of using the ESM to buy (on loan) weapons? I'm sure someone really thought about it… dear Politico forget it. If these are the ideas, sell our share immediately, collect 15 billion and goodbye!" Northern League senator Claudio Borghi had his say in a post on

In the aftermath of the Chamber's vote against the ratification of the ESM treaty, Senator Borghi once again commented to La7 : "We have been fighting against this Treaty since it was conceived. The League is the only party that has always voted against even in its first version, which cost us 50 billion because perhaps someone forgets what the first ESM cost: the loan to Greece that we will never see again. Faced with this, after many battles, we finally reached a political point and, democratically, the Italian Parliament rejected a treaty, as it obviously did, because the forces that are now in the majority have always been against the treaty itself ”.

And today we are back to discussing the ESM, even if the European official interviewed by the press agencies specified that the use of the Stability Mechanism for Defense "is not a discussion that is being held in the Eurogroup or between the bodies that govern the Mes”.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/mes-difesa/ on Sat, 11 May 2024 05:22:37 +0000.