Deadlock in budget row between Rome and Brussels?

The battle lines are drawn in the row over Italy's budget for 2019: after the EU Commission rejected the draft budget of a member state for the first time in its history, the government in Rome has been given three weeks to revise it. But not all commentators criticise Italy's course. Some see it as humane economic policy.

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Naftemporiki (GR) /

Salvini copying the wrong example

By copying Trump Salvini could cause major damage, Naftemporiki fears:

“Salvini is following in the footsteps of the US president who promotes the 'America first' doctrine and therefore condemns globalisation and is building up the walls of protectionism. Not without reason Salvini is now being described by many as 'Italy's Trump'. ... In Europe, which is already facing the worst crisis in its history, the battle between Rome and Brussels on various fronts could end in disaster. Putting up walls and forming camps in areas of conflict is a dangerous game with unpredictable geopolitical and economic consequences.”

Causeur (FR) /

An intelligent and humane economic policy

The EU Commission has criticised Italy's draft budget for 2019 on the grounds that it lacks structural measures. Henri Temple, a lawyer and member of the national-conservative party Debout La France, disputes this in Causeur:

“The Italians have chosen a sweeping policy for reviving the economy. In raising production and consumption it will also increase tax revenues, leading to a balanced budget. ... What's more, apart from tax cuts and a basic income for the most underprivileged, the draft budget also foresees a partial tax amnesty for those who repatriate their assets and a reduction in the retirement age. This is indeed an economic and social structural reform characterised by intelligence and humanity. And it respects the coalition's election promises.”

Corriere della Sera (IT) /

What Italy should take to heart

Legal expert Sabino Cassese explains in Corriere della Sera which aspects of the Italian budget the EU Commission has criticised:

“The Commission reminds us that Italy committed to the joint criteria together with all the partners. ... In doing so it notes that we pay the same amount in interest on public debt as we do for education. It also reminds us that we are the second biggest recipient of European structural funds and the investment plan for Europe. It points out that in a crisis Italy would be the country most at risk. The Commission underlines that this is not about tensions in the relations between the EU and Italy but above all a conflict between the Italians of today and those of tomorrow, because the former will be passing on the bill for the services and pensions that they receive to the latter.”

France Inter (FR) /

Politics for an ageing country

The young coalition in Rome is making policies for an ageing country, columnist Pierre Haski complains on the website of the radio station France Inter:

“An ageing country is one that doesn't invest but puts its money under the pillow, that doesn't look to the future with gusto as the young people would if they could have their way, but looks to the past, wary of new developments: a conservative country. Everything was better in the past. And how do you govern a country like that? Like Matteo Salvini: by lowering the retirement age again, raising the national debt to make it easier for pensioners to save. ... Today his Lega party is the most popular in the country, and is hugely successful with voters over 60. Never has Italy been led to this extent by the young, but for the old.”

Neue Zürcher Zeitung (CH) /

Red alert

Decisive for Italy is the risk premium on its government bonds, the Neue Zürcher Zeitung explains:

“And that premium puts the populist government in Rome in a very poor light. Since it came to power it has almost tripled to over 300 basis points. The Italians get fresh money at an interest rate of 3.5, the Germans at 0.5 percent. That makes servicing their onerous national debt of 2.4 trillion euros expensive. And that, in turn, increases the burden on the treasury, once again raising concerns over whether Italy could be moving towards bankruptcy. The result: the country's already struggling banks, which hold most of Italy's government bonds, are increasingly coming under pressure.”

Jornal de Negócios (PT) /

Why the markets won't fix it this time

Europe must come up with a new strategy for dealing with Rome, Jornal de Negócios comments:

“To tame Italy's budgetary rebelliousness it would suffice for the European leaders simply to do nothing. The pressure of the markets will soon force Rome to hoist the white flag. That's the theory at any rate. This was the strategy applied vis-à-vis Greece in 2015, when the Greek government challenged Brussels. But this strategy will hardly be suited to Italy. Firstly because there's no Herr Schäuble any more. Secondly because Italy's government doesn't fear leaving the euro. ... Thirdly: an Italian bankruptcy and the resulting collapse of the banking system would have disastrous consequences for all Europe.”

La Repubblica (IT) /

EU defending Italy's citizens

The EU Commission's approach makes sense, writes Andrea Bonnani, Brussels correspondent for La Repubblica:

“The rejection of the budget put together by Lega and the Five Star Movement is not just necessary to protect the Eurozone. This decision by the EU commissioners is also and above all in the interest of the people of Italy. ... For the first time Brussels is taking on the challenge presented by a national government and attempting to contest its course of action not just on the basis of EU law, but also to serve the interests and protect the people of the country in question.”

ABC (ES) /

Commission has made the right decision

There is no argument to support letting Italy get away with this budget, ABC explains:

“Rome can't argue that Germany and France also contravened the budget deficit rules, for the simple reason that Italy's debt was already out of control even before the founding of the euro, yet this was always tolerated without complaint. Now, however, this imbalance has exceeded a limit that can no longer be ignored. ... The demagogues who govern Italy - if you can call this governing - can't expect the other member states with whom their country shares the euro to accept their crazy policy of increasing public spending. But above all the Italians themselves don't deserve to be continually impoverished by growing deficits and an unfair mountain of debt.”

Lost in EUrope (DE) /

Fatal for democracy

The EU's move is an unprecedented encroachment on the sovereignty of an EU state, Eric Bonse comments on his blog Lost in Europe:

“For economic reasons one can view this move as justified, perhaps even as necessary. But in terms of democratic theory it's fatal. ... The EU can only justify this deep intrusion into budget law on the basis of abstract rules and principles, but not with the will of a European nation or a legitimate ruler, as is normal in democracy. For that reason we face here a difficult, potentially irreconcilable conflict between the (non-elected) European and the national level - and not just a dispute over a few billion euros.”

The Independent (GB) /

No one can save Italy

The budget row between Italy and the EU is an explosive issue, The Independent points out:

“Sooner or later, Italy will provoke another eurozone crisis. ... Italy is too big to fail, yet too big to save, also. As the third largest economy in the eurozone and with a vast national debt, it is beyond the means of the Germans to bail out, even assuming they wished to. Markets fear some sort of breakup of the eurozone, banks collapsing, political instability and much else spreading out from Italy towards the rest of 'Club Med' and the EU in a wildfire of economic contagion. It could finish the euro; ... you have a packed EU agenda that leaves little time for the stale, circular arguments of Brexit.”