The 100 billion aid to Italy hanging on the whims of the EU hawks

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Perhaps it will not be 100 billion, as hoped by Prime Minister Giuseppe Conte and the Ministry of Economy Roberto Gualtieri. And to a large extent it will not even be non-refundable aid, but a leverage effect based on a mechanism very similar to the Juncker plan. The EU Commission on Wednesday will present its proposal for the Recovery fund, the most important tool for buffering the effects of Coronavirus.

In the past few hours, attention has focused on the size of the plan. In the Franco-German proposal, the resources mobilized are € 500 billion. The Commission had anticipated the possibility of a 1,000 billion fund.

The European Parliament, Antonio Tajani recalled yesterday, voted in favor of a plan of this magnitude, 500 billion in grants, 500 in loans. “Macron and Merkel’s proposal to invest 500 billion euros in the Recovery fund goes in the right direction but it is not enough”. Bad, added the vice-president of Forza Italia, “the intransigence and hostility of some northern countries. If the countries affected by the Coronavirus are not helped, the whole of Europe will go to its knees. Austria, Holland, Denmark and Sweden are a form of self-harm. Hitting Italy, Spain, France is like hitting yourself. ”

Yesterday Mario Centeno, president of the Eurogroup, expression of the states of the single currency, did not confirm the Italian quota given for certain by the government of Rome: «We cannot know if 100 billion are too many or too few. The answer must be proportional to the challenge and Italy is a great country “. Formula that leaves all roads open.

The fact is that the room for maneuver for the President of the Commission Ursula von der Leyen is extremely low. The plan must be financed in large part with European own resources, therefore with the contributions of the states, which should increase (also due to the exit of the United Kingdom), but not as much as would serve to finance an emergency fund like the one envisaged. Indeed, to meet the demands of countries that have opposed the Franco-German plan (Holland, Austria, Sweden and Denmark) the contribution of the states could increase very little.

The suspicion is therefore that in the end the largest part of the plan will be represented by InvestEu, that is the heir of the Juncker plan approved already before the pandemic and which aims to launch 650 billion of investments, public and private mix, concentrated in innovation and environmental sustainability.

Then there is the “conditionality” chapter. There are no conditions in the new Mes loan line for healthcare expenses. The Franco-German proposal on the Recovery Fund underlines the importance of carrying out reforms and maintaining budgetary discipline. That of the “frugal” states (Austria and Holland) makes stringent conditions a crucial point.

Yesterday the secretary of the Democratic Party, Nicola Zingaretti, wrote to the President of the European Socialist Party Sergei Stanishev, asking that the “Recovery fund provide for” non-repayable loans, medium-term temporality and without strict conditionalities “. A sign that this game is still open.

The Commission’s proposal will not be entirely “free”. Certainly there will be strong conditionalities on the destination of the investments. Nothing outside of the coronavirus crisis. Among the Northern countries there is a strong diffidence about how the Southern countries will be able to spend any grants. It was two days ago that the document of the “frugal” countries proposed a check by the Court of Auditors and also by European anti-fraud. Mutual mistrust that could continue for much longer.



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