By Silvia Marchetti
ROME (MaceNews) – Dissidents within Italy’s 5 Stars Movement ruling party will vote Wednesday against authorizing the European Stability Mechanism reform, and their opposition could spur a government collapse, 5 Stars sources said.
Premier Giuseppe Conte is scheduled to address parliament on Wednesday on Italy’s position ahead of a key European Union Council summit on the topic later in the week expected to give the green light to the reform. If the 5 Stars dissidents vote no, the government needs to find alternative supporters in the Senate, where it has a razor-thin majority.
A majority vote against the reforms in the Senate would be equal to a vote of no confidence against the government, and Conte would be obliged to step down.
According to a top 5 Stars dissident, if the government fails to delay the approval of the reform at EU level, almost 17 senators and 40 deputies of the movement are ready to vote against it. The opposition stands united against the reform.
“Any government that wants to keep ruling knows it’s a suicide mission to ask for a parliament vote on a text where it lacks enough support,” said the official.
The 5 Stars have always been critical of the ESM reform, which was recently cleared by the euro group and now needs approval by the EU Council uniting EU leaders before the ratification process by all European parliaments across the eurozone kicks off.
Under the reform plan, countries are required to commit to extremely tight fiscal adjustment paths to apply for future ESM aid.
The reforms also grant creditors new powers, which the 5 Stars dissidents also oppose.
“We want to scrap from the new ESM treaty the introduction of so-called single-limb CACs (collective action clauses) allowing any one single creditor to vote for a debt restructuring of a EU nation,” the official said.
The movement opposes an ESM reform that would introduce a forced, ‘pre-emptive’ debt restructuring program on member states in exchange for financial support and would hand over too much fiscal power to the ESM at the detriment of the European Commission.
By 2022, the ESM will provide the banking union’s Single Resolution Fund with a fiscal backstop funded by each member state depending upon its size.
“This is perhaps the only good news, given the backstop was supposed to come into force in 2024, but in order to tap into it countries are still required to meet tight fiscal standards,” said the top dissident.
The 5 Stars dissidents want the government to buy time to further negotiate a better deal at EU level that takes into account the so-called ‘package approach’ on other reforms.
“The ESM reform must go together with the completion of the banking union’s missing third pillar, the European Deposit Insurance Scheme (EDIS) allowing for greater burden sharing among member states, and with softer fiscal rules,” said another 5 Stars dissident.
“The current pandemic forces Europe to revisit its strict fiscal treaties as these are outdated to cope with future economic challenges”, added the source.
Italy has veto power to block the ESM reform, as the new treaty cannot come into force if it has not been ratified by all 19 ESM members through approval by national parliaments.
The reform has nothing to do with tapping into the current ESM for EU pandemic aid, which is also opposed by the 5 Stars.