By Silvia Marchetti
ROME (MaceNews) – Italy is seeking permanent structural aid at EU-level to tackle the economic impact of the Ukrainian war to shield firms and households, and which would benefit all member states, according to ruling coalition sources.
“Just like we did following the COVID pandemic outbreak, the European Union needs a central financing tool to invest in the recovery and support its industrial sector and workers. We need to make the Recovery Fund, set up to provide such money by raising it on the market through issuance of joint debt intruments, a permanent tool for emergencies”, said an official.
Sources argued that with the prolonged war between Russia and Ukraine, set to have “unpredictable costs and with long-standing ripple effects”, no single country could be left alone to handle the economic consequences with its own national budget, already under strain.
“It is unthinkable that given all resources are focused on the post-COVID recovery, individual EU member states should handle the financial response without centralized, structural EU funding that addresses asymmetric economic shocks like these triggered by the war “, added another source, who stressed how Rome had already spent €30 bln to lower soaring energy bills for firms and low earners.
The European Union currently lacks a single budget and has made little progress toward a political union, but one way to support the economy struck by the Russian- Ukrainian crisis could be through an extension of tools set-up during the pandemic, such as financing mechanisms ruled by deadlines and targets, and by boosting the already existing SURE unemployment fund.
“Today, pandemic funds are given to member states in tranches, and the EU can regularly check the implementation of goals and investments to make sure the funds are quickily and efficiently deployed, both through grants and loans”, said a source.
A EU coordinated and comprehensive Ukraine-crisis exit strategy to uplift the economy, which is expected to shrink by at least 2.7 percent this year due to the war, would take into account also the need to fund a common defense and a new energy policy no longer reliant on Russian fossil fuels, alongside measures to staveoff a potential food crisis. The EU imports from Russia roughly half of its cereals and corn, and a quarter of its vegetable oils.
Even though Italy, just like Germany, imports 40 percent of its gas from Moscow, the government of premier Mario Draghi is totally on board with a EU-wide Russian energy ban. However, sources warn it must be “phased out and gradual”, to allow EU countries to find new energy sources and diversify origin countries over the next four years, mainly with new partnerships in Africa.
“The pandemic, topped with the repercussions of the Ukraine crisis, call for an acceleration in the European integration process”, said the source.
Rome is pressing for an EU-wide boycott on all Russian fossil energy sources, but attempts to reach a deal at EU-level are facing a stalemate due to the opposition of east European members such as Hungary, totally reliant on Russian energy.
Draghi is also advocating for a cap on Russian-imported gas prices in Europe, which might be more feasible than a total boycott if the EU fails to clear the sixth set of sanctions containing the oil ban.
Italian imports of Russian energy products are expected to drop by two thirds by end of this year as the Italian government seeks alternative energy sources and partners, and is boosting the use of new offshore liquified gas stations.
“It would be unrealistic to say that no matter how things go, Italy and Europe would be independent from Russian oil before 2027”, said an official.
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Contact this reporter: silvia@macenews.com
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