July 02, 2020
How Italian politics could intrude
Our focus is very much on Italy today because Italian politics intrudes in complex ways into the EU discussions. Giuseppe Conte had a telephone conversation with Angela Merkel and came back relatively optimistic about the discussions on the recovery fund. But there are still big unresolved problems. Conte said that, unless the frugal four compromise on the recovery fund, he will not be flexible on the EU budget. Italy is a net contributor. It seems that Merkel is striving for a compromise, not on the numbers but on the link to economic reforms. Conte said that Italy is reforming, but nobody really believes this. The word reform has become widely abused in the European discourse. When we talk about linking the fund to reforms, we are talking approved programmes and troika. And we see no majority for that in Italian politics either.
Conte wants money for bridges, a big issue in Italy, motorways and hospitals. But he has no majority in his coalition for reforms. Corriere wrote yesterday that his privileged partnership with Five Star has broken down, and that cracks are now appearing in his relationship with the PD as well.
So, beyond the many technical complexities outlined in our main story, do not underestimate the tendency of Italian politics to intrude as well.
The ESM is becoming the big dividing issue. Merkel has tried to persuade Conte to go for an ESM loan. He said No. Paolo Mieli argues in a comment this morning that a proposal by PD leader Nicola Zingaretti in favour of an ESM programme is worthy of serious consideration. Yet Conte's government does not even think it worthy of discussion. Five Star is dead-set against it. Mieli notes that only two Five Star deputies are wavering after Zingaretti's proposal. For so long as Five Star remains united on this issue, there are simply not the numbers in the Italian parliament. The PD, together with Matteo Renzi's lot and Berlusconi, are not anywhere near a majority. The two parties of the right are against, as is the far left. We should not forget that the old parties of the political centre lost their majority at the last election. There exists a whole genre of Italian political journalism that pretends otherwise.