Italian ruling coalition votes against ESM reform. On Thursday, Italy’s lower parliament rejected a long-awaited eurozone bailout fund overhaul, casting doubt on approving an EU deal to save struggling banks.
The vote showed Prime Minister Giorgia Meloni’s coalition’s strong opposition to the ESM revamp, which all eurozone nations save Italy have supported.
“For six months here, there will be no talk about ESM,” Meloni’s Brothers of Italy party’s Ylenia Lucaselli told reporters.
Deputy Economy Minister Maurizio Leo said parliament was sovereign and the government must respect its decisions.
Meloni and Economy Minister Giancarlo Giorgetti were absent from Thursday’s discussion and vote, which defeated the ESM by 184 votes to 72 with 44 abstentions.
Brothers of Italy and Giorgetti’s League opposed it, while Forza Italia abstained. Former Prime Minister Giuseppe Conte’s 5-Star Movement rejected the proposal.
ESM can aid eurozone governments in cut-off markets, recapitalize banks, and provide prudent financing. Many Italian parties worry the accord would restructure Italy’s massive public debt. The original ESM is operating, but Rome must agree to underwrite the Single Resolution Fund, which handles failing banks.
The ruling coalition in the finance committee also voted against ratification on Thursday, arguing that the pact did not guarantee parliament’s input in any future aid request.
Meloni has often criticized the ESM for asking nations to execute austerity or financial reform programs in exchange for aid, arguing that this increases debt restructuring risk.
EU member states reached a fiscal leniency pact the day before the ESM vote. Meloni liked the new Stability and Growth Pact but was upset it didn’t remove strategic investments from deficit and debt calculations.
Earlier this month, the Italian government said it would not adopt the ESM treaty without a stability accord.
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