(Finance) – The theme of failure ratification of the treaty on the European Stability Mechanism by Italy could arrive in the Eurosummit hall today. To raise it, along the lines of what was written in the letter sent to President Charles Michel, will be the President of the Eurogroup Paschal Donohoe. “We should not lose sight of the importance of finalizing the ESM reform and the benefits this would bring to our institutional architecture. In recent months we have received regular updates on the ongoing parliamentary process for the ratification of the ESM Treaty in Italy, and we await look forward to its conclusion as soon as possible” underlined Donohoe, in the letter sent days ago to the President of the European Council in view of the meeting of the summit of the leaders of the Eurozone countries (Eurosummit) to be held today in Brussels.
“The ratification of the ESM Treaty – he continued Donohoe – will establish common public support for the Single Resolution Fund for banking crises, which is our long-standing agreement and is in our interest, for everyone, both for the Eurozone as a whole and for individual Member States, including the ‘Italy. The ratification of this treaty represents a further step towards a more resilient Banking Union and a more complete and deeper Economic and Monetary Union. After the ratification of the Treaty – concludes the president of the Eurogroup -, we will also be able to collectively reflect on the role and future instruments of the ESM”, as requested above all by Italy, which is very critical of the way in which the State Rescue Fund was used to implement the controversial austerity policies, during the Eurozone crisis.
On the Mes the government, for now, is taking its time and preparing an exit strategy. The most probable path is that of a ratification of the ESM with the formal clarification that Italy will never activate it. The issue is also divisive among the opposition benches: the Democratic Party, centrists and +Europa have always pushed for ratification. The M5S has traditionally always been anti-MES even if Giuseppe Conte is showing a certain caution on the issue.
Italy is the only country in the euro area that has not yet given the green light to the new ESM. After the suspension, desired by the majority, which was voted last July From 20 to 24 November the legislative proposals on the ratification of the ESM will be discussed in the Chamber. The bill will thus resume its parliamentary process.
To fuel the discontent spreading across Europe due to Italy’s failure to ratify the ESM, the end-of-year deadline is approaching, when the bilateral agreements on funds made available by the States to act as a bridge to the arrival of the ESM in support of Single Resolution Fund. The ‘bank rescue’ fund, after the eight-year establishment period at the end of 2023, will have an endowment of almost 80 billion euros paid by the banks themselves. To these, the ESM could add a further emergency credit line for another 68 billion. The fear is that now, due to events similar to those that occurred in mid-March at Credit Suisse, the 80 billion from the Single Resolution Fund may not be enough and without the ESM backstop the public finances of the countries potentially affected by the contagion would have to intervene. Thus in European circles the discontent is twofold: on the one hand it concerns the idea that Italy’s failure to ratify prevents other countries from using the instrument, and on the other that of a potential impact on the financial markets of this area of uncertainty. Then there is the more strictly political issue: that of respecting the commitment to ratification after the signing of the treaty. The point, according to some European sources, raises a question about Italy’s own position with respect to the EU, to such an extent that some of the parties involved do not even seem to want to consider the possibility of non-ratification.