Why is the EU not punishing Rome?
The EU Commission and Italy have settled their row over the budget plans put forward by the government in Rome. Italy now intends to limit new debt to 2.04 percent of GDP. Some commentators praise Brussels' decision not to go ahead with an excessive deficit procedure. Others criticise that by giving in the EU has undermined the credibility of the Stability Pact.
Brussels' clever strategy
The EU Commission has made a wise decision in refraining from pressing ahead with an excessive deficit procedure, Deutschlandfunk comments:
“Because what would have happened if Brussels had given the Romans a red card? It wouldn't have changed Italy's plans, but the populist government would have had the perfect whipping boy. ... Instead the Commission pulled out the yellow card and made it clear that Italy must finally start solving its home-made problems itself instead of always blaming others. In proud Italy that approach is definitely more productive than just pointing the finger. In a year - after the European elections - the hour of truth will come. Then the Italian government will have to prove its calculations were correct.”
Better to shred the stability pact right away
With the compromise in the budget dispute the EU has effectively given up the stability criteria for the euro, Der Standard criticises:
“Not so long ago the Eurozone was on the brink of collapse due to the spiralling debts of Greece, Spain, Italy and other countries. A more stringent stability pact was supposed to ensure that such a crisis was never repeated. And what does Brussels do at the next opportunity? It lets the shaky candidates lapse again. The EU has already paved the way for the EU Commission by saying that it may tolerate France exceeding the three-percent deficit limit. The reason for this lenience is obvious: the election campaign is on. A confrontation with Brussels could strengthen the populists. It would be more honest to have done with it all and put the stability pact through the shredder.”
EU had no other choice
The overall scenario in Europe right now has forced Brussels to give in, La Vanguardia concurs:
“The French government's concessions to the yellow vests played a significant role in softening Brussels initially firm stance vis-à-vis Italy, because treating the two countries differently would have been difficult to explain. The proximity of the European elections next May also has made greater flexibility seem wiser as a way to forestall the predictable growth of the Eurosceptic, populist and far-right parties. In the end, however, the conclusion is that the problems of two major European countries are being resolved by increasing the public debt, which is already too high in the European Union. And this hasn't gone down well with the countries of the north, including Germany.”
Business and citizens will foot the bill
Unfortunately the budget row will cost Italy a good deal of money, La Repubblica rails:
“To judge by the government's satisfied reactions it's as if nothing had happened in the last 83 days. ... As if in the time between the joyful announcement that the deficit would be exceeded and this inglorious turnaround the Italian economy had silently awaited events without suffering the consequences of the time that was so needlessly wasted. Now that the deficit and the GDP have once again returned to the starting point that the Finance Ministry's experts had specified, we can see that much has changed since September 27 - for the worse, as far as the economy goes. The tug of war with Brussels was apparently just a joke for the government, but the repercussions for the state, businesses and families are anything but funny.”
Salvini's cynical rhetoric
Italy's government is cynically pitching the amended budget as a success, Jutarnji list notes:
“Eight weeks ago deputy prime minister Matteo Salvini ironically compared the 'little letter' from Brussels with letters to Father Christmas. ... In just two months real economic factors have forced the government in Rome to come to its senses - at least on paper. It distanced itself from vague estimates of economic growth, cut the budget by ten billion euros and even corrected the value of state bonds. ... And then Salvini commented yesterday that after the polemic [against the EU] the budget was even better than it was before.”