Italian Prime Minister Giorgia Meloni on Thursday slammed the European Stability Mechanism (ESM), the eurozone’s bailout fund, calling it a “useless” tool and preferring to let Parliament debate the ratification of its reform. “The question I would like to ask before we get into the debate that will take place in Parliament on whether or not to ratify something that is not very useful is: Can this instrument be made useful?” she said on the TV show “Porta a Porta”, which is broadcast on the public broadcaster Rai 1.
mistrust
“As long as I count for something, I can sign in blood that Italy will not call the MES,” she noted. Created in 2012, the ESM borrows from the financial markets to lend at subsidized interest rates to struggling eurozone countries, which in turn need to implement reforms to improve their competitiveness and fix their public finances. It has a maximum lending capacity of 500 billion euros, which is intended to help countries participating in the common currency in the event of financial difficulties.
This mechanism is deeply mistrusted in Italy, where it is seen as an instrument of the austerity measures imposed by northern Europe on southern countries. By early 2021, eurozone member states had signed a treaty that strengthens the role of this fund and paves the way for its ratification by national parliaments before it comes into force. So far, Italy is the only country in the eurozone that has not ratified the reform.
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The use of this mechanism is linked to strict reform requirements, such as those imposed on Greece in the 2015 rescue package when the then left-wing government lost access to the financial markets. “Why has MES never been used by anyone? Because the conditions are too strict and because MES is a privileged creditor, which means that in case of difficulties it will be the first to be repaid,” added Giorgia Meloni.