Disorder in Europe: Brussels is preparing to impose sanctions on Italy
It is obvious to the world public circles and even ordinary citizens of the European Union countries that Italy is trying to pursue a policy undesirable for the EU today. New history of Italy began in the spring when Giuseppe Conte came to power as a result of the elections. In the summer, a ruling coalition was formed between the two movements of euro-skeptics: the “Five Stars Movement” and the “League of the North”.
The leaders of both parties, Luigi Di Maio and Matteo Salvini, became deputy prime ministers of the new government. And although both political forces are not completely agree with each other, they look at the European Union in the same way and believe that Italy would be better off.
Mr. Salvini in numerous interviews, for example, repeatedly criticized Brussels, not only for the problem of refugees (the main agenda of the League), but also for economic policy in general. Salvini also stated the need to lift the sanctions on Russia. In short, a government has emerged in the very heart of Europe, which is increasingly becoming a thorn in the eye of the European Union. And in Brussels intend to act.
By the autumn it became obvious that the European Commission would block Italy’s oxygen literally everywhere. Brussels is dissatisfied with the country's large national debt and budget deficit. In October, the draft of the new budget of Italy fell under the European rink, and now sanctions can be imposed on Rome for disobeying the European Commission. Moreover, the talk about the need to rein in recalcitrant Italians, starting a war against the financial institutions of this country, is increasingly heard. What could be the consequences?
The stumbling block was the draft of the new budget of Italy. This document failed miserably when trying to approve it in the European Commission. According to the rules of the European Union, all member states should coordinate their budget policy with Brussels, there is no other way.
Euroskeptics, even when they came to power, did not conceal that they would sabotage draconian budget policies imposed by Brussels on Italy. Therefore, the "League of the North" and "Five Stars" decided, as promised to the people, to unclench the budget vise and not to stifle the already crisis economy of the country.
European Commissioners Valdis Dombrovskis and Pierre Moscovici told Italian Finance Minister Giovanni Tria that the draft presented had “significant deviations” from the budget goals set for the EU. The response to this was the statement of Deputy Prime Minister Di Maio, who said that Italy was generally ready to lead a pan-European protest against the policy of budget savings.
In the draft budget of Italy, the government recognized that the country's economy in 2018 will not grow at a rate of 1.5%, the ceiling will be 1.2%. However, the government has planned an inflow of investments in the economy (including the state), reducing the burden on small and medium businesses, as well as relieving the tax burden of self-employed Italians. The effect of these reforms is able to bring the Italian economy to a growth of 1.5% in 2019 and 1.6% in 2020.
The negative side was the recognition that the budget deficit will amount to 2.4% of GDP in 2019, but in 2020 it should be reduced to 2.1%, in 2021, to 1.8%. According to the forecast of the Italian government, the ratio of public debt to GDP should gradually decrease: from 130.9% in 2018 to 126.7% in 2021.
The war is close
The only problem is that the EU’s crisis of confidence in the new Italian authorities has matured long ago. The European Commission did not believe that Euroskeptics are ready to get down to business and reduce the indicators of debt and budget deficit.
“We need confidence in nu“We are awaiting a new and revised draft budget plan by November 13, this is necessary. The questions that we raised are still on the table, ”said Pierre Moscovici, European Commissioner for Economic Affairs, who commented on the situation.
Despite repeated warnings, Prime Minister Giuseppe Conte stated that there is no “B” plan for the budget program. He also indicated that the government does not intend to comply with EU requirements.
What are these requirements? According to EU rules, no country should have a budget deficit of more than 3% of GDP, and national debt should not exceed 60% of GDP. Countries that go beyond these limits should submit to the Commission such draft budgets, from which it will be seen that they are moving in the right direction. And although the Italian budget deficit does not exceed the 3% threshold, the EU is actively demanding that the authorities reduce the government debt to GDP ratio. This indicator in Italy exceeds the permissible two times.
But Italy, meanwhile, simply has nowhere to draw resources from. In Italy (as well as in Europe as a whole) there is a demographic decline, during which it is simply impossible to achieve stable economic growth.
How the EU wants to achieve the subordination of Italy
The goal of the EU now is to achieve the resignation of disagreeable eurozone Italian politicians. To do this, it is necessary to make economic conditions unbearable, which will provoke an explosion. Rome is already openly threatened with sanctions against the banking system, that is, the use of leverage that dealt a serious blow to unruly Greece in 2015, which also did not want to extend the budget saving policy.
The former head of the Eurogroup, Jeroen Dijsselbloem, proposed, in particular, to reduce the value of Italian bonds in the markets so that the country's banks defaulted on their obligations. The head of Eurocentrobank Mario Draghi noted that the recent sale of government bonds to the banks of the country will strike at them in the amount of 375 billion euros.
In Brussels, suggested that Conte, Di Maio and Salvini will not give offense to the banks of Italy. Unlike Greece, Italy has a trade surplus and the country does not depend on the external money supply to pay for its imports. This lever can be used to leave banks in business, which, after a strike by the EU, will prove to be insolvent.
Karsten Wendorff, a member of the Advisory Board of German Federal Banks, offered to respond to this by refusing the EU to buy Italian government bonds and place this responsibility on the Italians themselves.
“Instead of a European fund that buys Italian government bonds and is supported by European taxpayers, a national fund should be created,” wrote Wendorff in a publication for the Frankfurter Allgemeine Zeitung.
Such a fund will be financed by “national bonds of solidarity”, which Italian households will be required to buy, for example, in the amount of 20% of their net wealth. At this rate, “almost half of Italy’s public debt can be converted into bonds of solidarity,” said Wendorff.
Finally, the European Commissioner for Economic Affairs, Moscovici, said a completely paradoxical thing. If Italy does not go to austerity, then EU will impose financial sanctions in the amount of 0.2% of GDP, which reached $ 1.9 trillion.
mbers, in strategy. We need confidence in the future. The Italian government claims that it will ensure that the ratio of debt to GDP drops significantly in the coming years, ”said Portuguese Finance Minister Mario Centeno in an interview with Bloomberg.
After Italy’s response to the budget comments, the European Commission will have three weeks to prepare an opinion. Estimated date of announcement of the decision - November 21.
EU policy, therefore, threatens Italy with a new financial catastrophe. And the European authorities took up the new Italian government seriously, but not to improve the lives of ordinary Italians, but to achieve the resignation of the Conte government. It is not pleasing to Brussels, not only for economic reasons, but also from a political point of view.
The political course towards national authority and the promotion of traditional values in society, which was taken by the country's authorities, is completely out of fashion in the rest of "civilized" Europe. And finally, the EU does not intend to lose Italy, whose authorities are increasingly claiming the need to arrange an Italian equivalent of the British Brexit.