Italy must reckon with criminal proceedings

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The populist strength in Rome keep to your budget. The EU Commission must act now to prevent worse. The markets could force Italy to its knees. Bernd Riegert from Brussels.

The European Commission has probably exert no other choice more than an official excessive deficit procedure against the Italian government. The majority of EU diplomats in Brussels agreed. “The Italians want the power of the sample. You can have,” said an EU official in a confidential conversation. “In the end, it will have to inform the markets,” he added. International lenders and investors should require more and more interest-rate spreads for Italian debt, it could be time for the Italian Minister of Finance, Giuseppe Tria. Since the inauguration of the Italian government of right-wing Lega and the populist Five-star movement has doubled the interest-rate premium of 1.5 to three per cent. This so-called “Spread should rise” to more than four percent, want to think the government in Rome. The had at least said a few weeks ago the Italian Minister of the interior, and Lega-Chairman Matteo Salvini. Overall, the interest rate premiums have cost the Italian state, to date, nine billion Euro. In the next year, debt in the amount of 430 billion euros need to be re-financed. The interest-rate spreads should continue to rise, because investors fear the risks that could be the refinancing of debt quickly is impossible.

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The markets will bring Italy to your senses

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Former ECB chief economist: markets will bring Italy to your senses

Rome is presenting rosy Figures

The non-party Minister of Finance, Tria had refused to in the night in writing to the European Commission, the Figures of the Italian draft budget for the year 2019 of the reality. Both the International monetary Fund as well as the EU Commission and the Italian statistical authority of a lower economic growth of around one percent. The government is 1.6 percent. With tax cuts, more social spending and higher investments to boost the economy Minister Luigi Di Maio, who is also the Boss of the Five star, the growth. The only way Italy could grow out of his much too high a debt of 130 percent of economic output “out”, says Di Maio. Any other household than this would be “suicide”, says the Minister who wants to bring his constituents, above all, a basic income of 780 Euro in the month.

Di Maio: We can only survive with this budget

The excessive deficit procedure in the next week?

The EU Commission assumes that the debt in Italy will grow faster than the government claims in its draft budget. EU Commissioner Pierre Moscovici had repeatedly let you know that the Italian Numbers, “violated blatantly” against all the rules of the Euro-Zone. Therefore, the draft budget was rejected for the first time in the history of the EU completely. The excessive deficit procedure that will now follow, will be to support the fact that the debt is agreed otherwise than in the EU treaties – are not at a sufficient pace to be mined, but is likely to still rise. The Commission may initiate the procedure next week, when the Ministers of the Euro countries to come to a special meeting in Brussels. Then Italy would have made concrete obligations to its budget to rewrite. The deadline for this would be three to six months. Then could be tested once and will be repaired. These steps should lead to success, could be imposed by the EU Commission, with the consent of the member States drastic penalties in the amount of up to 40 billion euros against Italy. It would also be possible to bunkers of Italian credit as a “preventive measure” on a special account and only pay when the budget is from the Brussels point of view back in order. Italy would then have the option to bring an action before the European court of justice against the penalties.

Criminal payments in a budget procedure has so far never. The States have agreed so far, almost always in an amicable way with the Commission. However, the excessive deficit procedure are not uncommon. All EU countries except Sweden and Estonia, have already had an excessive deficit procedure as a neck. At the Moment no procedure is pending. After the financial crisis of 2008, the rules for the Surveillance of fiscal policies in the member States – also with the consent of Italy – have been exacerbated.

Worry lines: ECB chief Draghi (li.), EU Commissioner Moscovici (Mi.) advise within the Euro-group

“This is a provocation”

“The Italian government provoked the escalation,” says Markus Ferber, the financial policy spokesman of the Christian democratic EPP group in the European Parliament. “If the European Commission, the integrity of the stability and growth Pact, must add in no way small. Rom should come up with this Affront, would mean the end of the Pact.” The Italian Minister of the interior, but such warnings don’t matter. For him, the Motto “Italy first”. The budget was a budget for the Italian citizens. “Even if I don’t like those in Brussels, we will make it anyway,” said Salvini in in the usual populist manner in the night in Rome. The government of doing “the opposite” of what the EU is asking. “Inspections, UN troops and sanctions, we don’t need it”, joked Salvini in the Morning in an Interview with RAI.

A prominent Italians, the government in Rome is already clearly know that it can’t help and want to. Mario Draghi, the President of the European Central Bank, had said at his last news conference in October that the purchase of the Italian state will set bonds as planned at the end of the year. “It is not part of our mandate, to Finance the deficits of individual countries,” said Draghi.