What hides the agreement in progress between France and Italy on the revision of the Stability Pact
The in-depth study by Giuseppe Liturri
There is shivering down your spine when reading the line – which according to what La Repubblica reports today – was agreed between Emmanuel Macron and Mario Draghi with reference to the revision of the Stability Pact.
Yesterday the Financial Times had re-launched Draghi's declarations, according to which “ the new rules must reflect on the past to be corrected and on the future that must be designed. If previously a revision of the rules was necessary, today it is inevitable. All this must be done with the European Union, together ”. Now we learn that " a first draft proposal is being drawn up in Paris to be presented in Brussels in December, a few weeks before the start of the French EU presidency" .
As usual, we have to understand who, on the Italian front, the French are talking to. And, above all, what is the level of sharing of the proposal in our political world. It seems that at the moment, the ministers of the economy Franco and Le Maire have started talking about it .
It is astonishing to read the " three objectives for the new economic governance ". The choice seems to be – along the accompanying path to the gallows – between a carriage with horses and golden cushions that proceeds on a red carpet and a cart with rickety wheels along a bumpy sheep track. The point of arrival does not change, the first way is only more comfortable.
Let's see, these 3 objectives, which in the end are only two.
- “ The first is the revision of the fiscal compact in the“ twentieth rule ”, according to which (in the name of the old rigor) each country is forced to reduce by one twentieth a year the stock of debt exceeding the threshold of 60% of GDP. In this case, France wants to propose a differentiation of the reduction paths . The second objective is therefore to allow each Member State to agree with the Commission on a multi-year “tailor-made” path to reduce the stock of public debt, on the basis of a plan that Brussels should monitor periodically ”.
In summary, this is the proposal of the European Fiscal Board that we have already commented here . In an absurd rule – which has never in fact been applied by any Member State since its introduction in 2012 – the speed of debt reduction is only changed. As if to say that instead of leading Italy to crash into the wall at 200 km / h, it is considered appropriate to reduce the speed to 150 km / h. We move and “ reason ” within the same failing paradigm. They really seem modest palliatives, almost " terminal " treatments , the " objectives " we are talking about. Making each state adopt a differentiated path, subject to monitoring, of debt reduction / GDP, is equivalent to going under the program for macroeconomic imbalances, an instrument envisaged by the current rules and already applied to Greece. Tools we thought were buried in the attic.
- “ The third point – the one on which it will probably be easier to broaden the consensus – is the golden rule, that is, a differentiated treatment of public spending for investments in the green and digital transition. We will proceed to Brussels for tears and reassembly. The variable of the pandemic will weigh, which in these hours returns to bite. And a lot will also depend on the role that post-Merkel Germany will be able to play. And yet, the challenge of the common debt remains: the mechanism underlying the recovery philosophy will have to be structured, German Liberals permitting ”.
This apparent opening is just the fig leaf to hide the absurdity of the previous goals. The opening towards " green " and digital is based on the assumption that " quality " expenditure with a high multiplier on GDP. Granted and not granted that this is the case, where is it written that we should limit ourselves to those expenses? If someone in Italy believed that the prevention of hydrogeological instability was worth more than the 4 billion allocated with the PNRR, and it was necessary to invest 65 billion (what emerges from a recent estimate of the Municipalities), in Brussels they would prevent us, because they are not "useful investments. ", according to them?
We could give another ten examples. The substance is always the same, and it is also the fundamental defect of the PNRR: the investments that are needed (and how if they are needed!) Cannot be decided in Brussels.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/che-cosa-cela-lintesa-in-fieri-tra-francia-e-italia-sulla-revisione-del-patto-di-stabilita/ on Sat, 27 Nov 2021 13:27:54 +0000.