What is the position of the Draghi government on the revision of the EU Stability Pact?
Giuseppe Liturri's analysis
“ Men make plans and the gods smile ”. If in this famous sentence by the Israeli writer Meir Shalev, you try to identify the men with Paolo Gentiloni and Mario Draghi and the gods with the finance ministers of eight "frugal" countries, you will have the plastic representation of what is coming from Brussels in the next months.
The Eurogroup and the informal Ecofin council – organized by the Slovenian presidency of the Council – were held on Friday 10 and Saturday 11 and it was an opportunity to get an idea of the “smile of the gods”.
Which took the form of a "position paper" with the first signatory the Austrian finance minister Gernot Blümel, flanked by his colleagues from seven other countries (Denmark, Latvia, Slovakia, Czech Republic, Finland, Holland and Sweden) who, reciting the role of the bad cop (we know that the good one is based in Berlin), they reviewed the usual mantras that we thought ended up in the attic in March 2020: " The Treaties oblige member states to avoid and reduce the excessive deficit … the debt / debt ratio Too high GDP must be reduced ”.
“ Southern countries' dreams of a debt-friendly Europe are becoming a nightmare ”. Thus the Politico.eu website, has previewed this document. And long and learned disquisitions by Italy, France and Spain in favor of a timely revision of those rules? Worthy of a smile of compassion at best. Indeed, the signatory countries have declared that the only revision of the rules according to them is to make them more expeditious and effective in their application.
Their position with reference to the issue of the coincidence between the reactivation of the Stability Pact and its revision is even more cutting. “ It takes time to discuss and improve the framework of economic governance rules and that discussion should also be based on extensive consultations by the Commission. Quality is more important than speed ”. With all due respect to all those, Draghi and Gentiloni in the lead, have repeatedly declared themselves firmly opposed to the reactivation of those rules without first having put their hand to their reform.
The comment by Senator Alberto Bagnai, economic manager of the Lega is straight to the target: " This is yet another European asymmetry: the EU takes time to reform itself while proposing burning deadlines to solve complex and stratified problems over time such as those of justice and the public administration ". He then added: “For the umpteenth time, on the occasion of a crucial junction in the European debate, an Italian 'position paper' is missing. This consigns our country to a position of negotiating subordination that is inadequate to its size and role in the European project. A precious opportunity has been lost to be proactive and proactive in the face of interlocutors who, hiding behind the obvious such as the need to reduce debt, propose the path of austerity instead of 'that of growth and elude the fundamental issue, which is to have rules based on certain data and not on arbitrary estimates “.
The rules of the Stability and Growth Pact – which entered into force in 1997 and then reformed between 2011 and 2013 – are only temporarily and partially disapplied due to the general safeguard clause activated in March 2020, which however should be deactivated in 2023, already forcing at the end of 2022 to draft a budget law that respects the constraint of expenditure growth and aims at achieving the medium-term budgetary objective which, for Italy, is equivalent to a surplus of 0.5% of GDP.
The final statement issued on Saturday did not explicitly mention this document, but reiterated the objective of a gradual reduction of public deficits without, however, putting the recovery at risk. This irremediable contradiction should be resolved, according to ministers, by making the best use of the resources of the EU Next Generation. That is, almost nothing. Suffice it to say that Spain and Italy – the most damaged by the crisis triggered by the Covid containment measures – despite being the largest beneficiaries in absolute numbers, when it comes to calculating the benefit in relation to GDP, they fall widely in the ranking.
Also noteworthy are the conclusions of the Eurogroup – a forum that formally decides nothing but in which the most important political wishes are expressed – held on Friday. President Paschal Donohoe dulled the thunderous press releases of the Istituto Luce del Ventennio newsreels by stating that only thanks to the efforts of the Commission have the Member States been able to vaccinate their population. Too bad that, still at the end of May, there was no trace of the EU countries among those with the highest percentage of vaccinated.
Well aware that, whenever there is a crisis, economic divergences increase in the EU, a technical report by the Commission has been presented which analyzes the uneven impact of Covid on the different states and the measures to improve convergence: the usual junk of supply-side tools (labor force participation rate, education, digital with a splash of “green”) that have failed for ten years, with the NGEU in the role of a “key tool”.
In the same hours, the Minister of Economy Daniele Franco announced that for 2021 debt and deficit will improve compared to the forecasts of the Def . An inexplicable and submissive way of bowing the head right in front of the outcry of those who propose the usual bankruptcy recipes for our country. At this point it becomes legitimate to ask what his negotiating strategy is. We dare to hope that it does not only include plan A. Where A stands for Others. But now there are only a few days left until the publication of the Nadef and we will find out if the Mef intends to kneel or keep their backs straight.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/qual-e-la-posizione-del-governo-draghi-sulla-revisione-del-patto-di-stabilita-ue/ on Sat, 18 Sep 2021 06:13:12 +0000.