ESM showdown is approaching

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There is no peace for the fragile M5S-PD ruling coalition after another week spent arguing over the ESM bailout fund.

Crafted to assist Eurozone countries experiencing serious financing troubles, the now infamous bailout fund has jumped to the headlines especially with the explosion of the Covid-19 crisis and after last spring the Eurogroup made it a tool with light conditionality made available to back the health systems of euro area countries.

Until then, the fund had been criticized because to receive its money the country applying for it had to undertake massive reforms, in the style of those that brought Greece to its knees and inspired by the fiscal culture of the Anglo-Saxon and particularly German world. The member states of southern Europe, traditionally under financial strain, have always perceived it as an instrument of indirect colonization.

It has recently been reformed with the introduction of new tasks to deter speculative attacks against European banks, new criteria that modify the terms of a public bond and precautionary lines of credit in the event of a financial crisis. In no other European country, however, it has become the subject of such intense and ideological public debate as in Italy.

The reform will be presented to Parliament on Dec. 9 by Prime Minister Conte, who will have to get the political approval from the Chamber and the Senate in order to support its adoption at the European Council on Dec. 10-11. On this crucial point, it is an all-against-all, within and between parties.

In opposition center-right stands the position of Silvio Berlusconi, initially in favor of the reform and then against it, with the result of generating strong tensions within his Forza Italia party just as part of his MPs savoured the possibility of collaborating with the ruling majority by turning their backs on Italy’s right-wing populists. Among these it was above all the League that ignited the controversy against the ESM, despite the substantial green it had provided the reform process with when it seated in government with the M5S in 2018.

But the big political problem naturally concerns relations within the ruling majority: PD whip in the Chamber of Deputies, Graziano Delrio, reiterated that the allies risk a government crisis especially in the Senate where numbers are unstable, while the Minister for European Affairs Vincenzo Amendola pointed out that “a government without a majority in foreign policy must make us reflect”.

This point includes the same perplexities that grip the Head of State Sergio Mattarella, who fears that it would be inconceivable that a coalition born expressly to mend Italy’s relations with Europe after the M5S-League populist parenthesis could end up destroying one of the tools put in place by Brussels to overcome the current crisis.

Meanwhile, it is necessary to cite the latest broadsides unleashed by M5S comedian-founder Beppe Grillo against the fund, the letter signed by about sixty 5Stars MPs containing a threat to block the reform in Parliament and the continuous anti-ESM pronouncements issued by the de facto M5S political leader Luigi Di Maio.

The ruling coalition pastiche have alarmed Italy’s EU partners and institutions, who fear that an Italian U-turn could harm the rest of the Union at an already difficult time given the tug-of-war with Budapest and Warsaw over budget and state of law and practically endless negotiations on Brexit with the UK. The German press took the opportunity to open the traditional barrage against our country, even evoking the possibility that Rome should abandon the European project.

At this point, Prime Minister Conte will have his work cut out to attempt a difficult synthesis in Parliament and perhaps expose himself publicly in the Mes, after the deafening silence of recent months. It is not an easy moment for Conte: after two months of waning personal consensus and the allies’ blatant impatience for his management of the main dossiers (reforms, public appointments and Recovery funds), a government crisis at this point in the legislature – moreover on a crucial issue such as relations with Europe – would constitute genuine political suicide. A real point of no return if one considers the huge difficulties in putting together the pieces of a new parliamentary majority.