ROME (Reuters) – The Italian parliament should have a proper and wide-ranging debate on the euro zone bailout fund before deciding whether to ratify its reformed treaty, Economy Minister Giancarlo Giorgetti said on Wednesday.
Italy appears set to be the last holdout on the issue, after Germany’s constitutional court last week rejected an appeal that could have halted Berlin’s ratification of the new arrangements for the European Stability Mechanism (ESM).
“We are aware of the commitment undertaken by Italy and that at present all the other participants have proceeded with the ratification, but … there is a clear need for a proper and broad debate in parliament before deciding whether or not to ratify the treaty,” Giorgetti said in parliament.
The ESM was created in 2012, during the euro zone’s sovereign debt crisis, to lend to euro zone governments cut off from markets. It has a 500 billion euro ($533 billion) war chest and can also lend to recapitalise banks and provide precautionary credit.
The ESM treaty issue has been dragging on in Italy for years. A number of politicians from all parties have attacked the reform, arguing, among other things, that it would increase the risk of a restructuring of Italy’s huge national debt.
Italy’s new Prime Minister Giorgia Meloni, who took office in October, was strongly against the ratification of the treaty when she was in opposition.
“Enough with playing with our future. Italy should say NO to the reform of the ESM,” Meloni tweeted in December 2020, when she also spoke in parliament on the matter.
New ESM tasks under the reformed treaty include providing a backstop to the Single Resolution Fund (SRF), which is responsible for dealing with failing banks in the context of the Banking Union.
“The ESM is an unpopular institution,” Giorgetti told lawmakers, adding it should become a vehicle to boost investments across the bloc and help soften the negative impact of sky-high energy prices.
($1 = 0.9389 euros)
(Reporting by Giuseppe Fonte and Alvise Armellini; Editing by Keith Weir)
