There is no peace for the ESM. The site Politic gives news that some countries would like to use its resources for European defense. Of course it would be necessary the unanimity of the States of the area and, even before that, the ratification of the reform of the relevant Treaty by Italy, the only state not to have done so. Other countries, however, would not agree. So in the tormented story of European Stability Mechanism a new episode of divergence between community partners presents itself. Until now, praise had been expressed in advance about the role that the ESM could, and could, play as a parachute for the Resolution Fund for banks in crisis, if the Fund’s resources were not adequate for the need for interventions. But this planned function followed, in the proposals, a previous version regarding a particular use of resources with the so-called “healthcare” ESM – while they remained the effects of Covid – providing Italy with the possibility of accessing loans from the Mechanism at a relatively favorable rate for approximately 36 billion. A possibility which, however, was deemed not to be taken advantage of due to the non-sharing of the functioning of the Mechanism and due to fears of a particular consequent structural macroeconomic supervision, with particular reference to public finances.
From healthcare to defense
Today, as has been said, we are moving to defence, which is the open issue to be addressed also in relation, in addition to the internal problems within NATO for the related financing by the allied countries, to the feared impacts of the war of Russia against Ukraine and the lessons that can be learned from it. What is certain is that the shift recorded, in the position of some countries, from health protection and interventions for banking and systemic stability to European defense and its financing is significant, while the ESM remains inert because Italian ratification is lacking. However, if this last hypothesis was launched with the aim of finding greater consensus, first and foremost on the part of Italy, it does not seem that the right path has been taken. The defense question requires an organic solution which addresses all aspects of the problem, obviously with the finding of financial resources in the foreground, but without the need to think about the ESM because, if the need for common debt were shared at least in part, many other paths would be viable. This does not mean that the condition in which the amended Treaty finds itself due to the refusal of ratification by the Italian government can remain pending for a long time. At this point either conditions are put in place for commitments on the sidelines of the Treaty to be adhered to at European level in order to be able to ratify it (while in Italy it could be established that, as proposed in the pastthe ESM cannot be effectively used without a parliamentary vote with a particular quorum) or, if there is a possible denial on the part of the government, the signatory partners decide accordingly how to proceed.
A political question
It is certainly not a simple issue, as it is not only technical-financial but also highly political. Before it keeps churning out alternative hypotheses, also with the aim of achieving Italian convergence, it would be good if the problem were addressed with a definitive approach and, if anything, designing radical alternatives also with reference to the way in which bank resolution interventions are financed. In fact, it must be borne in mind that the latter, together with the aforementioned Fund, represents the second pillar of theBanking Union, so far only partially implemented, while the third, namely European deposit insurance, is completely unimplemented. How we can talk about a Banking Union when only the pillar of centralized banking supervision has been fully but inadequately created so far is difficult to agree with. So the proposal, although not acceptable, of the defensive ESM can at least be the element that leads to overcoming a condition of uncertainty and taking a path that leads to an organic and unanimously shared. (All rights reserved)
MF – Number 090 pag. 9 of 05/08/2024
