Editorial
In the Chamber, a crucial vote took place yesterday regarding the authorization to ratify the ESM (European Stability Mechanism). The result was the rejection of the proposal, with 72 votes in favour, 184 against and 44 abstentions. There was, therefore, a deep division within the Chamber on a topic that Italy has been pursuing for years.
The political factions expressed divergent positions: the Democratic Party, +Europa, Italia Viva and Azione supported the ratification, while Fratelli d'Italia, Lega and Movimento 5 Stelle opposed. Forza Italia, We Moderates and the Green and Left Alliance abstained, revealing a complex political heterogeneity.
Surprisingly, former prime minister Giuseppe Conte voted in agreement with Giorgia Meloni and Matteo Salvini, showing a convergence of positions between opposing factions. The government tried to downplay the outcome, underlining the solidity of the Italian banking system and suggesting that the proposed change to the ESM would not have a decisive impact on the country.
The opposition reacted by calling for the resignation of the Minister of Economy, Giancarlo Giorgetti, considering the vote as a defeat. Political tension is expected to increase, paving the way for continued campaigning ahead of the next European elections. It should be noted that Italy is the only country in the European Union that has not yet ratified the ESM reform, creating a potential starting point for discussion at a European level.
What is the ESM?
The European Stability Mechanism (ESM) is an intergovernmental organization that is part of the strategy implemented by the European Union to ensure financial stability in the euro area. In concrete terms, a permanent fund has been established, also known as the "state bailout fund", which aims to provide financial support to countries that find themselves in difficult economic conditions.
It has a lending potential of 500 billion which can be implemented in various ways: loans (in particular from creditor countries to those in difficulty); purchases of government bonds; credit lines as a precaution.
However, these are tools that can only be used under specific conditions. In more complex situations, a memorandum containing a macroeconomic adjustment program (therefore envisaging policies that affect public spending or taxation) while one can be less stringent in prudential situations.
At a governance level, the ESM is guided by a "council of governors" made up of finance ministers from the euro area. For most decisions, a unanimous vote of the body is required, but for urgent requests, which may come from the commission or the European Central Bank (ECB), the required majority may drop to 85%. However, not all ministers have the same weight within the council: the relevance of one's vote depends in fact on the amount of capital that the individual states have paid for the creation of the ESM.
All euro area states have subscribed to a share of capital in favor of the ESM. Each country contributes to the fund in proportion to its population and gross domestic product. The capital subscribed so far is equal to 704,8 billion euros, of which 80,5 billion have actually been paid into the organisation's coffers.
The main financiers are France, Germany and Italy, respectively with 189,45 million euros, 142,27 million and 125,02 million of subscribed capital. They contribute overall to financing 64,5% of the fund. They are therefore countries that have greater decision-making weight in voting, equal in the order to 26,7%, 20,1% and 17,6% and can exercise the right of veto in the most urgent decisions. Outputs under two million for the smallest states of the Union: Latvia (1,94). Estonia (1,79), Luxembourg (1,75), Cyprus (1,37) and Malta (0,63).
In terms of paid-up capital, however, all states stand at 11,4% of that subscribed. In absolute figures, Germany paid 21,65 million euros, France 16,26 and Italy 14,29.
Currently, there are five completed financing programs in which the ESM took part: Ireland (2010-2013), Greece (2012-2018), Spain (2012-2013), Cyprus (2013-2016) and Portugal (2011-2014 ).
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