Ylenia Locaselli, a member of Giorgia Meloni’s Fratelli d’Italia party, said there would be no further discussion on the European Stability Mechanism for six months. According to an unnamed source, this rejection may prompt the European Union to consider amending the European Stability Mechanism to better suit the needs of the eurozone. Within Prime Minister Giorgia Meloni’s government coalition, strong discussions have arisen on transforming the European Stability Mechanism (ESM), and the reform has been accepted by all other eurozone countries except Italy.
The proposed ESM reform was rejected by 184 votes in favour, 72 in favour, with 44 abstentions. Both FDI and the Northern League voted against it, while Forza Italia, the other main coalition group, abstained. The opposition 5-Star Movement, led by former Prime Minister Giuseppe Conte, also opposed the proposal. Deputy Economy Minister Maurizio Liu acknowledged Parliament’s sovereignty and said the government must respect Parliament’s decision.
The purpose of the European Stability Mechanism is to provide financial support to euro area governments isolated from markets, as well as to recapitalize banks and provide precautionary credit. However, many Italian parties fear that the agreement will lead to a restructuring of Italy’s large public debt.
The original European Stability Mechanism remains operational, but the Single Resolution Fund – which manages failed banks – cannot help without Italy’s approval of the deal.
A source in Meloni’s office claimed that this reform is not considered vital because Italy boasts one of the most stable banking systems in Europe.
As of Thursday, members of the government coalition had voted against ratification in the Budget Committee, citing that the treaty did not guarantee Parliament’s participation in potential aid requests. Meloni has consistently criticized the European Stability Mechanism for forcing countries to impose austerity or fiscal reform programs in exchange for support.
Source: Reuters
Cover image source: Getty Images
