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Italian Prime Minister Giorgia Meloni this week signaled a major policy shift regarding Italy’s support for the EU’s controversial eurozone bailout fund. Meloni, who had been adamant during Italy’s opposition to ratifying the fund, said at a press conference at the end of the year that he would change his position if the “outdated” fund could be made “more efficient”. appeared to be positive. This is despite vocal opposition from within her own party and her own previous denials of her financial support mechanism during her time in opposition.
A majority of parliamentarians from Meloni’s own ruling Fratelli d’Italia party last month rejected a left-wing resolution for Italy to ratify the European Stability Mechanism (ESM). ESM is a fund established by Eurocrat in 2012 to help restore the fiscal health of the struggling euro area economy. Ensure liquidity in the open market, subject to necessary fiscal reforms.
Italy has frustrated Brussels by being the only eurozone country that has not ratified the ESM. Many Italians fear that the ESM will force Rome to restructure its debt payments at the behest of its Nordic creditors.
The dispute over the ESM has forced an uneasy split between Rome’s three government parties, with the nationalist Lega party firmly opposed as an affront to Italian sovereignty.
Defending Italy’s lower house of parliament’s decision to reject the ESM, Lega leader Matteo Salvini said his country “will not risk paying the cost of bailing out foreign banks,” a sentiment shared by many within Meloni’s party. He said that.
Salvini’s comments put him at odds with Meloni, who at a year-end press conference in late December outlined plans to tweak the terms of the ESM to favor Italy and avoid stiff opposition in parliament.
Even in the early months of his tenure as prime minister, Meloni expressed his hostility towards the ESM, and shortly before his election in 2022 he publicly announced on live TV that he opposed Italy’s participation in the plan. It is well known that he took a blood oath.
The Italian Prime Minister has so far not specified a precise alternative to the current ESM agreement. The ESM agreement has previously been used by other eurozone countries, including Greece, Ireland, Portugal and Spain, to condition their budgets to be cut.
After the Eurozone crisis, Rome’s astronomical public debt worth 2.9 trillion euros is seen by many commentators as a major political weakness, with the EU having failed to survive Italy so far. It is seen as a means of keeping a check on Even his campaign promise to tackle illegal immigration.
The controversy over EMS is reminiscent of the fallout from last year’s failed windfall tax on bank profits by Mr. Meloni, which led to a temporary plunge in the Italian stock market and the collapse of a coalition between Mr. Salvini and his Lega party. Relationship tensions arose.
Since coming to power in 2022, Meloni’s government has sought to balance a populist message with a reformist and conciliatory stance toward the EU, despite consistently high poll numbers. It has endured intense criticism from the right.
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