According to tagesschau.de (original article in German, translation here), in response to the European Union's coronavirus aid package, Italy's government has made it clear that "[they] don't want this money from Europe". The specific part of the aid package that they are rejecting is the line of credit issued through the European stability mechanism (ESM), which would allow Italy to borrow an extra 2% of their 2019 GDP, a sum of approximately 39 billion euros.

39 billion euros are on the table. But Italy’s government makes it clear that we do not want this money from Europe. The funds are part of the so-called Corona aid package, which the EU finance ministers decided on just before Easter. Italy’s Deputy Minister of Economic Affairs Antonio Misiani made it clear yesterday that his country would only use the short-time work allowance and loans from the European Investment Bank from the aid package.

However, Rome will not touch the third part of the aid package, the funds offered from the ESM euro rescue fund. Prime Minister Giuseppe Conte had previously commented on the Brussels decisions: "Italy doesn't need the ESM". And for all doubters, the Prime Minister later added: "To put it more clearly, we deposit it: Italy is not interested in it."

At first glance, this is an astonishing attitude – with which Rome waives 39 billion euros from the European Union. A sum of this amount is available for Italy through the agreement reached by the EU finance ministers on Good Friday night.

Specifically, Italy could use aid loans from the ESM rescue fund, specifically for expenditure in the health system. Money that would flow without conditions. The finance ministers had painstakingly agreed against the initial opposition from the Netherlands, especially with regard to Italy. Rome waives anyway, Misiani announced the government line for Easter brunch by video on television: "We will not use the ESM".

The article goes on to state that the reason for the government taking this position is due to threats from the Five-star movement that the coalition government's continued existence relies on rejecting the ESM measure. The article isn't clear, however, about the specific reasons for this rejection, except that their preferred measure would have been the Eurobonds proposal that was rejected at the EU summit.

Why is this part of the aid package being opposed by, reportedly, the Five-star movement and Lega parties, and rejected by the Italian government as a whole?

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    Although I answered this, I realize now that the question is probably too speculative (or rather I don't see how answers to it can be otherwise), so I'm voting to close it. Commented Apr 15, 2020 at 11:28
  • @Fizz have the Italian government really not released any justification for their actions?
    – CDJB
    Commented Apr 15, 2020 at 13:17
  • Sure, but they were saying something a bit different last month (or rather Conte was). And depends who "the government" is... Your q is a rather complex one: "Why is this part of the aid package being opposed by, reportedly, the Five-star movement and Lega parties, and rejected by the Italian government as a whole?" If you just want a soundbite, you already have it your question's quote: "Prime Minister Giuseppe Conte had previously commented on the Brussels decisions: "Italy doesn't need the ESM"." Commented Apr 15, 2020 at 13:27
  • Technically, Italy (or parts of its government) announced they won't apply. My understanding that the ESM will however remain open to them (and any other EU country). It makes a difference because they are not necessarily sacrificing that much by loudly rejecting now.
    – Relaxed
    Commented Apr 22, 2020 at 8:58

5 Answers 5


Despite the Salvini/M5S-style accepted answer, as more clearly related in Apr 15 news: the ruling coalition in Italy is split on the matter.

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.

The worry that the way the EU presently finances the cornonvirus stimulus may lead to a debt crisis thereafter, particularly in Southern Europe, is shared more broadly than by some Italian parties though. E.g. The Economist Intelligence Unit wrote about it. However, other experts interviewed by CNBC thought those worries are overblown. (I'm not gonna get into those details here.)

Probably the reason why only ARD has covered it on the 13th (Monday) is that the news they broke was confirmation from a minor minister position of some "old news" from before the weekend, regarding the Italian government position already announced by PM Conte, as Reuters reported:

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.”

And as ANSA reported on the 14th, the only real development since then was some spat over what was said on [Italian] RAI TV:

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.

More relevant perhaps, Di Maio, who is the Foreign Minister and part of M5S (he was the movement's leader at one point) said on April 1 that the ESM "did not work in Greece", and called for "coronabonds" instead.

The Economist has posited that the hardened stance of Italian politicians on the ESM might be because:

In early April one poll found that 53% of Italians were ready to leave the euro or EU.

Bloomberg had commented in December that despite the fact that Salvini wasn't in government anymore, him and Di Maio were [still] basically in agreement over the ESM (actually about blocking its reform back then). So when Salvini threatens Conte nowadays with a vote of no confidence over the ESM (use), he's probably banking that Di Maio will have no choice but to back him up in such a move, for fear of losing popular support.

According to CNBC, about a month ago (Mar 20) Conte was not opposed to ESM funding coronavirus response:

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.

For a bit more context/history, back in December, Conte's government was threatened by a rebellion of some of its M5S supporters over an ESM reform package proposal. So Conte had always had a difficult line to straddle with ESM, to keep his M5S supporters on-board. That balance seems to have tilted strongly against any ESM whatsoever in the past month.


Why is Italy rejecting 39 billion euros of EU coronavirus aid?

Because this ESM credit comes with a requirement to reform.1

Italy wants money with the least requirements possible. They still think they can get a better deal than this ESM debt offer2.

Ever since the euro has been introduced, credit with no or very soft requirements has been possible. Italy is banking that at some point they will get offered money with soft requirements again. In that case, agreeing to hard requirements now is a bad deal.

Whether a better deal is possible, nobody knows. Time will tell whether this negotiation tactic has paid off.

1: Wikipedia gives this quote:

The signed conditional MoU agreement will focus on requirements for fiscal consolidation and structural reforms to improve the sovereign financial stability.

2: I can't predict whether they will get a better deal or not. And let's not discuss whether they ought to have a better deal or not - This answer tries to stay neutral in that respect. But it is clear that Italy believes they can get a better deal.

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    You lost me at "They still think they can get a better deal than this ESM debt offer." At risk of pointing out the obvious, the whole thing will collapse. Not just Italy or the Euro. The whole shebang: Euro, USD, other G20, developing countries, corporate debt, banks, all of it. And Italy, like every other country, would be crazy to get strings attached to bailouts when others don't. Commented Apr 14, 2020 at 19:09
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    @Fizz: Sorry, but the onus is on you for that one. That's totally correct until proven otherwise. See Greece. Commented Apr 14, 2020 at 19:34
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    @Fizz: Not at all. I'm just putting forward that the media on this side of Europe is all over how it's out of the question that there will be aid from north to south without stringent strings attached. To which, frankly, I've only one reaction: let it collapse in one giant heap of manure infested ash so we can finally move forward with a post-capitalist world. Commented Apr 14, 2020 at 19:41
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    @DenisdeBernardy You expect this to collapse. But it hasn't yet. Italy's rejection can be explained by their thinking they can get a better deal. Are they right? Maybe, maybe not. Time will tell. (I'm from the Netherlands, and IMHO they already got a better deal than they should have) But whether a better deal will materialize is speculation - so I tried to leave that out of this answer. Italy believes it will - that's enough to explain their rejection.
    – Sjoerd
    Commented Apr 14, 2020 at 23:14
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    @divibisan See en.wikipedia.org/wiki/… . I think program 1 and/or 3 qualifies in this case. Both state: "The signed conditional MoU agreement will focus on requirements for fiscal consolidation and structural reforms to improve the sovereign financial stability."
    – Sjoerd
    Commented Apr 14, 2020 at 23:28

The real answer to the question is briefly touched on (but not explained) in one answer, which quotes a news agency report that the Italian government wants to borrow against its preferred form of instrument instead: common debt.

The real answer is the Italian government desires to borrow money from the EU on terms that the debt which thereby results will be common debt.

The usual suspects - led as ever by Germany - are dead set against that, on principal.

Naturally, you will appreciate that it makes sense for the Italians to borrow money from a bond which is issued as common debt: if they borrow money on the usual terms, as offered through the Stability Mechanism, they must eventually repay the loan.

They don't wish to repay the loan!

Instead, they propose that the money they borrow shall become common debt: that is, a debt which must be repaid by the bloc of 26. This shifts the burden of repayment off the Italian taxpayer, as Italy must repay only one twenty-sixth part of the loan, with the other 25 nations picking up the bill for the rest.

Common debt, you understand, is debt which must be repaid by all the 26 nations in common, i.e. in equal shares, thereby relieving Italy of most of the cost of the repayments.


The linked document says:

This will allow the use of EUR 37 billion under cohesion policy to address the consequences of the COVID-19 crisis.

We are not talking about some extra money that would be sent to Italy, but rather about reallocating the money already assigned to Italy.

Italy contributed to EU budget 15 bln euros in 2014, receiving back 10 bln. I didn't find more recent data, but we can assume these would be similar numbers.

The money reallocation comes from cohesion found. For years 2021-2027 Italy is assigned 38.5 bln euros.

To summarize the article looks like manipulation. EU proposes to reallocate the funds already given to Italy, in exchange for political concession towards the Brussels. The deal would not be any net gain. Italy chooses to keep the funds in the cohesion fund and finance the COVID-19 response from another part of their budget.

  • why -1, I quoted the document attached to the question, the money comes from cohesion policy fund. For obvious reason, EU does not have any other money, then the money paid by the members. Claimed that the money comes from Brussel itself is ridicolous.
    – obdi
    Commented Apr 23, 2020 at 11:57

According to Italy's current foreign debt, which is about 130% of GDP, rejecting another credit is logical. And calling a credit offer a "COVID help package" is irrelevant, I think.

In fact, Italy is not rejecting aid - which it lacks. It is rejecting a credit offer from the EU.

Of course, Italy rejects it. If you are full of credits, I doubt if you want another one.

About the accepted part of the packet, coming from EIB - according to EIB press-release, it is much more of a "soft" loan, with credit holidays, which would not overweight Italy's existing debt a lot.

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    But they do want additional credit, via the Coronabonds. Which admittedly will have a different pattern of repayment and responsibility, but it is ultimately just another credit line.
    – Jontia
    Commented Apr 14, 2020 at 13:01

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