Lega And Forza Italia Vote Against Eurobonds
Yesterday afternoon, the European Parliament met to vote on a resolution to combat the COVID-19 pandemic and its consequences. The text passed with 395 yes, 171 against and 128 abstentions.
What was approved yesterday?
The European Parliament approved the introduction of Recovery Bonds guaranteed by the EU budget, the exhortation to member states to use the new ESM and rejected the coronabond hypothesis.
The situation that has upset everyone is the vote on the rule that provided for the “EU-wide mutualisation of a substantial proportion of the debt that will be issued to counter the consequences of the crisis”.
What are Corona Bonds, MES and Recovery Bonds?
- Corona Bond: (also called Eurobonds) are bonds (bonds, ed) guaranteed by all the countries of the eurozone, a kind of common debt. In order to finance the essential services that the State guarantees its citizens, each State generally spends more than it collects through taxes. The interest varies depending on the duration of the loan, but mainly on the reliability of the issuer. A European title would be safer than an Italian title, wobbly because of the spread.
The criticism levelled by the Nordic countries is the unjust union of debts made by countries with complex macroeconomic situations.
The Lega and Forza Italia have voted against this motion because: “Eurobond means Eurotax, give up fiscal sovereignty, hand over the keys to Germany and Troika”.
With Eurobonds a system would be created where the European Commission decides the budgetary policies of the individual Member States and possibly also decides the destination and the extent of the funds between pensions, public investment, employment policies and the like, with greater control over the fiscal aspects that accompany them.
This does not mean that Germany and the Troika will be in charge in Italy, because European rules must, however, pass through sovereign national parliaments.
- Mes: The European Stability Mechanism was created in 2012 to lend money to countries in financial difficulty. So far he has spoken for Spain, Cyprus, Greece, Ireland and Portugal and access to ESM funds was conditional on the signing of a memorandum in which the country was committed to structural reforms and fiscal measures to improve its public accounts.
The European States have removed the part of the memorandum to dedicate the fund to health expenses without conditions. The controversy about the MES is simple. In a time of crisis, strict limits are not sustainable. Even to strengthen the fund, Italy would always be expected to have a maximum aid ceiling of 2% of GDP. Moreover, the money borrowed should be returned with interest.
- Recovery Bonds: A reconstruction fund called Recovery Fund was created to finance economic recovery, through the issuance of bonds – recovery bonds – whose proceeds would be allocated to the assistance of countries most affected by the pandemic.
What is the best future for Italy and Europe?
After the adoption of this resolution, something has certainly changed.
First of all, the Italian parties have changed their positions on many aspects. What stands out is the vote against the Lega e Forza Italia at Eurobonds.
If the motion had been passed, we would have had an increasingly cohesive and strong Union, able to compete with economic giants such as the US and China.
Being united, as I said in a previous post, is our only remaining chance to compete in the world.
Of course, Europe’s duty is to consider all countries in the same situations, helping countries in difficulty.
If this does not happen, the already fragile foundations of this poorly-united Union will collapse.
The Recovery Bond solution is not bad, it is a base on which you can work. Thanks to France, a compromise has been reached that has allowed even Germany to approve. But it doesn’t stop there, because Macron managed to snatch a gentleman agreement (future agreement) on Eurobonds.
It is certainly that Europe has taken a clear position, which the European Council cannot ignore.
What are we gonna do with the Recovery Bonds now?
Thanks to the Recovery fond and Recovery Bond, it is introduced into the economy
A figure of 1500 billion. This figure will grow if European countries need it.
Italy has a great chance with this project that, if it had been alone, it would never have been able to finance. We have basic needs, needs that we cannot and must not lose.
Now, if our rulers act wittily, we can solve most of our problems. Health, workers at home, Smes who no longer have an income.
Now we can do something for everyone.