ROME (Reuters) – Italy’s parliament is expected to hold a full and thorough debate on the eurozone bailout fund before deciding whether to ratify its reformed treaty, Economy Minister Giancarlo Giorgetti said on Wednesday.
Italy appears to be the latest to stay on the issue, after Germany’s Constitutional Court last week rejected an appeal that could have prevented Berlin from ratifying new European Stability Mechanism (ESM) provisions.
“We are aware of the commitment made by Italy and that by now all the other participants have proceeded with the ratification, but … it is clear that a proper and wide debate in parliament is necessary before to decide whether or not to ratify the treaty,” Giorgetti told parliament.
The ESM was created in 2012, during the eurozone sovereign debt crisis, to lend to eurozone governments cut off from the markets. It has a war chest of 500 billion euros ($533 billion) and can also lend to recapitalize banks and provide precautionary credit.
The issue of the ESM Treaty has been dragging on in Italy for years. A number of politicians from all parties attacked the reform, arguing, among other things, that it would increase the risk of a restructuring of Italy’s huge national debt.
New Italian Prime Minister Giorgia Meloni, who took office in October, was strongly opposed to ratifying the treaty when she was in opposition.
“Enough playing with our future. Italy should say NO to ESM reform,” Meloni tweeted in December 2020, when she also spoke in parliament on the issue.
The ESM’s new tasks under the reformed treaty include providing a backstop to the Single Resolution Fund (SRF), which is responsible for dealing with failing banks under the banking union.
“The MES is an unpopular institution,” Giorgetti told lawmakers, adding that it should become a vehicle to spur investment across the bloc and help mitigate the negative impact of sky-high energy prices.
($1 = 0.9389 euros)
(Reporting by Giuseppe Fonte and Alvise Armellini; Editing by Keith Weir)
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