Prime Minister Giuseppe Conte said last week Italy would continue to eschew the ESM and battle instead for the issuance of common debt, which is opposed by Germany, Austria, Finland and the Netherlands.
But Conte’s position is being contested by the centre-left Democratic Party (PD), the second-largest party in the governing coalition led by the anti-establishment 5-Star Movement.
The PD says the terms of the new ESM package, which are not premised on any policy or budgetary conditions other than that the money be used for health needs, means it would be self-defeating to decline it.
“If we can obtain billions in support of health care, without conditionality and respecting Italian sovereignty, I believe that we will have to take these resources. We need them for hospitals,” PD leader Nicola Zingaretti told reporters.
5-Star continues to see the ESM as a threat to Italy’s economic autonomy and has warned Conte, who is not a member of either party but is seen as closer to 5-Star, not to change tack.
Its leader Vito Crimi on Wednesday called the ESM a “rip-off”, adding that 5-Star, the biggest party in parliament, would never endorse its use. He added that at some stage EU institutions will impose budget and fresh policy conditions on countries that accept ESM funds.
Conte will have to settle the dispute before a video conference among European leaders on April 23 when Italy will be expected to make its position clear.
He tried to defuse the quarrel on Wednesday, warning in a Facebook post that the ESM “risks dividing the whole of Italy,” and adding that more information was needed on the terms of any credit lines before a final decision could be taken.
Until these details are clear, discussing whether an ESM loan is in Italy’s interests is “a merely abstract and schematic debate,” Conte said.
Italian Prime Minister Giuseppe Conte on Friday criticised the deal, saying making available cheap loans from the euro zone bailout fund was a “totally inadequate tool” and Italy had no intention of applying for help from the ESM.
Analysts said the measures helped peripheral bond spreads near term, but without meaningful steps towards fiscal union longer term, upward pressure on the borrowing costs of weaker states would return.
“Italian spreads reflect disappointment that Italy might not use the ESM facility,” said Antoine Bouvet, senior rates strategist at ING.
“There is a stigma attached to using the ESM facility — it doesn’t play well on the domestic scene. Also, we had these headlines with big numbers, but the ESM part is worth a small amount.”
Using the European Stability Mechanism (ESM) bailout fund in the coronavirus crisis would be "like going to the loan shark", opposition nationalist League party leader Matteo Salvini said Monday. [...]
[Conte] has attacked Salvini and others on the centre right for accusing him of agreeing to the ESM use, and Salvini and allies have accused the premier of using RAI state broadcaster for alleged propaganda against them.
Conte said the EU should make use of a 500 billion euro ($539 billion) fund, created at the height of the last decade’s sovereign debt crisis to bail out nations, to finance countries struggling to cope with the pandemic.
“The route to follow is to open ESM (European Stability Mechanism) credit lines to all member states to help them fight the consequences of the COVID-19 epidemic, under the condition of full accountability by each member state on the way resources are spent,” he said.
