Italy’s Meloni slams eurozone fund

ROME

Italian Prime Minister Giorgia Meloni has slammed the eurozone’s rescue fund as “not very useful,” ahead of a parliamentary debate on whether to strengthen its role.

The European Stability Mechanism (ESM) was created in 2012 to allow eurozone states in financial distress access to markets and facilitate loans at subsidized rates.

In return, countries must implement reforms to improve their competitiveness and clean up their public finances.

The mechanism is deeply distrusted in Italy, where it is seen as an instrument of austerity imposed by northern Europe on southern countries.

“The question I would like to ask, before entering the debate that will take place in Parliament on whether or not to ratify something that is not very useful, is: can we make this tool useful?” Meloni told local television.

“As long as I count for something, I can sign in blood that Italy will not call on the ESM,” she said.

At the beginning of 2021, eurozone member states signed a treaty strengthening the role of the fund, paving the way for its ratification by national parliaments before it comes into force.

Italy is the only country in the 19-country eurozone that has not ratified the reform.

The use of the mechanism comes with strict reform conditions, similar to those imposed on Greece during its bailout in 2015, when the then-left government lost access to financial markets.

“Why has the ESM never been used by anyone? Because the conditions are too strict and because the ESM is a privileged creditor, meaning that if it gets into trouble, it is the first to be repaid,” Meloni said.