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Italy awaiting outcome of ESM changes

Two days on the calendar are marked in red for Italy: 12 and 13 December. On these dates there will be a decisive European Council meeting to understand whether the reform of the Italian State Savings Fund will crash or continue.

Published: November 26, 2019, 7:59 am


    Italy is waiting to know their fate, well aware of the huge risks of the European Stability Mechanism (ESM) version 2.0, a treaty changed in Brussels and endorsed by Italian Premier Giuseppe Conte without notifying Parliament.

    The European Stability Mechanism would demolish the already fragile Italian economic-financial system, plagued by a huge public debt, 70 percent of which in the hands of the banks. The institutions have threatened not to buy more government bonds should the reform pass, because they fear the effects of the possible restructuring of debt hidden in the reform. Given the clauses, Italy could not draw on the life preserver of the ESM precisely because of its very high debt, excessive and under EU monitoring; yet the institutes fear an earthquake anyway.

    It is no coincidence that the president of the Italian banking association, Antonio Patuelli, a few days ago vented on behalf of banking institutions: “The problems will become all our own, and we already have enough. This is a problem of the institutions of the Republic and we are part of it. Ask government officials why they haven’t consulted us. Italian government bonds? We won’t buy them anymore, we don’t have a portfolio constraint that forces us to buy a certain quantity.”

    Banks aside, another detrimental consequences would flow from the mass flight of foreign investors, who would find themselves competing to sell Italian government bonds, bringing the country one step away from the abyss.

    From whatever perspective you look at it, the debate around the ESM contains an even more relevant theme, concerning the roots of the European Union itself. Without any political unity, no monetary unit can exist – the demonstration of which is now visible to everyone.

    The EU rules have been written by a small oligarchy, much more careful to protect their own interests than to favor the life of the community’s citizens. No one has taken into consideration any fundamental factors, which should support a social and political community: a common language, of course, but also history and territory.

    The European Union, at least the current construction, does not take any of these into consideration, and this has been obvious, for the umpteenth time, with the reform of the ESM: a treaty that aims to erode national sovereignty of individual countries.

    In other words, liberal democracy has nothing to do with this EU, held together only by a single currency, the euro. The so-called common sentiment is lacking, because every supranational relationship is based only and only on technocratic stability mechanisms and financial treaties.

    The Brussels leaders should realize that club members are now tired of complying with increasingly pressing rules and to the detriment of their citizens. The only solution is a radical change, which should include fewer agreements to the advantage of banks and financial institutions and greater recognition of common Christian roots.

    The State Savings Fund is nothing more than an international treaty disguised as a financial vehicle, and fully reflects the harmful spirit of the EU, argued Italian fincial journalist Federico Guiliani.

    Regardless of how the issue relating to the European Stability Mechanism ends up, Brussels would do better to take note to avoid making other similar mistakes in the future, he said.

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