ROME — In the battle over Italy’s spending plans, Brussels was dominating. Not any more.
On Wednesday, the European Commission is expected to delay a decision on sanctioning Italy over its budget-busting spending plans.
The move comes after Prime Minister Giuseppe Conte and his Cabinet came up with a plan Monday to cut about €7.6 billion from this year’s planned spending.
Conte’s plan offers little clarity on the Italians’ intentions for 2020, but Commission officials judged it enough to justify putting off a decision, at least until after next year’s budget is approved in the fall, according to two people in Brussels and two government officials in Rome.
“We can avoid [a sanction] not because of magic tricks but because our finances are in order,” Conte said over the weekend at the G20 meeting in Osaka, Japan.
The Commission took the first step in launching a disciplinary process against Italy just days after the European election, launching an excessive deficit procedure (EDP), a program intended to bring government spending back in line with EU rules.
Six months earlier, the Commission and the Italian government struck a compromise to avoid triggering that very process, which could lead to a €3.5 billion fine, but Brussels changed course in response to what it saw as signs of Rome’s backsliding on pledges of budget discipline.
The EU executive had support for the action from other eurozone countries and appeared primed for further action. But with the Commission nearing the end of its term and talks underway on who would fill the EU’s top jobs, Italian populists seized their chance to take the upper hand and blame Brussels for the country’s sputtering economy and not helping alleviate the burden of migration.
Brussels is now preparing to back off the budget fight to avoid giving the Italian government extra political ammunition.
European Commission President Jean-Claude “Juncker and [Commissioner Pierre] Moscovici had second thoughts … including because the move would embolden [Interior Minister Matteo] Salvini and turn the EU into the main target in case of snap elections in the early fall,” according to one person in Brussels.
The Commission did not immediately respond to a request for comment.
Even pro-EU President Sergio Mattarella offered an unusual intervention in support of the populists’ position. “I don’t see any reason to launch an excessive deficit procedure against Italy,” he said during a press conference in Vienna on Monday.
Earlier that same day, official data showed unemployment had dropped below 10 percent for the first time since 2012. “The country’s economy is solid,” Mattarella said.
The handling of the budget dispute has fuelled grievances against the EU, with Italian politicians telling voters that they’re being treated worse than France, Germany or Spain, which have all breached eurozone deficit rules without consequences.
Lawmakers from Salvini’s far-right League, meanwhile, have kept European rivals off-balance by raising fears of Italy leaving the euro. In early June, Salvini’s party proposed a novel way of issuing small-denomination government bonds with a banknote appearance, known as miniBOTs, to pay for the public administration’s debts. Many observers took the miniBOTs as an alternative currency proposal and the first step to “Italexit.”
“If at an EU level people are reminded they can’t constantly abuse Italy’s patience it’s a good thing,” said League lawmaker Claudio Borghi, designer of the payment instrument. “I’m happy if it served as a reminder that Italy won’t to everything it’s told to by the EU.”
EU jobs
EU leaders’ tussle over the next Commission president and other top jobs gave Italy another chance to strengthen its hand.
Italy had supported Kristalina Georgieva of Bulgaria becoming Commission chief, but some reports suggested that was a way to gain support from Eastern European countries, both against an EU budget sanction and for Italy’s next commissioner to oversee economic policy. Late Tuesday, the EU leaders put forward Germany’s Ursula von der Leyen as Commission president.
Italy also joined the opposition to Frans Timmermans, a Dutch Socialist, as a potential candidate, a plan backed by Germany’s Angela Merkel and France’s Emmanuel Macron.
According to Stefano Buffagni of the 5Star Movement, “Conte led the group of 11 countries that opposed the deal cooked up Merkel and Macron, which demonstrates Italy does have influence at an EU level.”
“The French and the Germans want to tell us what to do with the appointments, on immigration, about the economy, but when it comes to deciding they always look at their own national interest before the EU’s.”
On the sidelines of the EU summit in Brussels on Tuesday, Conte said: “I explained to our 27 partners that the EU isn’t made up of two or three countries, or of blocs. If Italy isn’t part of the decision its not an offence to me but to millions of Italians that voted and have the right to be represented.”
Migration ‘insult’
Other EU countries’ stance on migration has also strengthened the populists in Italy.
On Tuesday, French government spokesperson Sibeth Ndiaye said Salvini’s behavior in the Sea-Watch case — the migrant rescue ship entered the Italian port of Lampedusa over the weekend despite being denied access — was “unacceptable.” The comments echoed German President Frank-Walter Steinmeier’s criticism of the decision to arrest the vessel’s captain, Carola Rackete.
Salvini hit back, tweeting that the French government should “stop insulting and open its ports to migrants.” On Tuesday night, after Rackete was freed by a Sicilian prosecutor, Salvini took to Facebook to broadcast his rage against the prosecutor.
“Had an Italian citizen violated military orders to enter a port in Germany, France, Australia or wherever to offload migrants, they would have been locked up for years,” he said. Salvini then announced he would issue an expulsion order for the German citizen which would bar her from returning to Italy for the next five years.
According to United Nations data, most sea-bound migrants this year reached Greek and Spanish shores. Salvini has often taken the credit for the drop in arrivals, but many Italians feel the country has been abandoned to shoulder the burden of migration.
Migrants from Africa arrive on an almost daily basis during the summer in Lampedusa but the news is largely ignored. Salvini’s policy, and rhetoric, singles out nongovernmental organizations, which he accuses of being in cahoots with human traffickers.
Whatever the cause — migration, the budget or EU power games — the populists are winning support.
The latest opinion poll by SWG published on Monday by La7 television shows the League is up to 38 percent support, from 33 percent during the EU election, while 52 percent of Italians believe the Sea-Watch captain committed a crime.
“Look at what’s happened across the last month,” a League government official said, speaking on condition of anonymity. “Why would anyone criticize us for saying the EU is a lame duck? It’s the very simple truth.”