Rome sticks to its guns in budget row with EU

The Italian government has presented its draft budget to the European Commission without modifications. The latter had rejected it three weeks ago and for the first time ever demanded that a member state submit a revised version. In particular the planned increase in public debt to 2.4 percent of the GDP means that the country now faces an excessive deficit procedure. Will the row between Rome and Brussels escalate?

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Naftemporiki (GR) /

Punishing Italy is dangerous

Brussels must not ignore the reasons for the budget row, warns Naftemporiki:

“Italy's government didn't come to power by accident, as some would like to believe. This is the kind of thing that happens when unrelenting pressure causes voters to rebel against the establishment. The fears of the small and medium-sized companies regarding inequality, migration and corruption won't abate until they receive real answers. ... Despite its threats the Commission's hands are tied because in Italy fines are seen as symbolic of the problems of the EU. If people associate the word 'Brussels' with 'punishment' one shouldn't be surprised if they vote so as to escape that punishment.”

Rzeczpospolita (PL) /

Monetary union won't collapse

There are many indications that a compromise will be reached in the budget row between Brussels and Rome, Michał Kleiber comments in Rzeczpospolita:

“Is there a danger that Italy could be expelled from the monetary union? That's hardly likely in view of the investments by French and German banks in Italy - banks from the two countries with the biggest influence over the Eurozone. These banks' investments in Italy well exceed 500 billion euros. Italy's exiting the Eurozone would inflict huge losses on them. Even if many observers feel we are facing a major crisis that could bring about the collapse of the monetary union, a compromise seems more likely.”

HuffPost Italia (IT) /

The problem isn't about finances

This row is not about a few numbers after the decimal point, economist Roberto Sommella explains in Huffington Post Italia:

“Brussels and Rome are behaving like two tigers, fighting over a few billion euros extra in the budget plan. ... The one side is roaring about launching deficit proceedings and imposing fines, while the other responds with deafening indifference. But neither of the two is really addressing the problems that could arise if Europe is allowed to implode and Italy goes into recession. ... Can all Europe's problems really be down to the fact that the Italian deficit is at 2.4 instead of 1.6 percent? Jean-Claude Juncker and company are not targeting Rome's budget but the Italian government, because they fear that Italy could trigger another exit.”

Les Crises (FR) /

Brussels' leeway shrinking fast

The conflict won't be resolved any time soon, writes economist Jacques Sapir commenting on the debate website Les Crises:

“This dance macabre will certainly continue until the European elections. Neither Rome nor Brussels want to be the first to bring things to a head. But Brussels' room for manoeuvre is shrinking from week to week. If Brussels gives in to Italy's demands, the EU's entire system for imposing economic sanctions will collapse. Other countries are just waiting for that to happen so they can step into the breach. If Brussels remains intransigent this will lead to a full-blown crisis. Brussels would be seen as bearing the responsibility. And Italy as a net contributor would exploit the situation to settle accounts.”

Mandiner (HU) /

Commission trying to corner Rome

Political consultant for the government Péter Àkos Hutás writes in Mandiner that in continuing to reject the Italian government's budget Brussels is limiting the options open to Rome:

“Clearly Brussels is once again being led more by political concerns than by the actual situation. Brussels is attempting to corner the Italian government so as to escalate its internal conflicts. But of course both coalition members are aware of what's going on and hence are fully focused on the European elections in May. At least until then they must hold the government together. What happens after that depends to a large extent on the election outcome. Because the cards will be reshuffled once again in May.”

Financial Times (GB) /

Allow Italy to invest in growth

The EU and Italy's creditors should opt for a gentler approach and give the country the chance to boost its economy through clever investment, the Financial Times advises:

“The only viable option left is to reduce Italy's debt service payments. This would create room to increase spending to modernise its economy without increasing the deficit and debt. Increased expenditure on infrastructure, and on ensuring that reforms are implemented, will ultimately boost the country's growth rates from their current anaemic levels. This will also enhance its ability to service debt in the future. Should the economy not grow, then it is inevitable that we will be forced to accept a substantial writedown on Italian debt.”