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G. Galli: The reform of the ESM and why it is so controversial in Italy

This paper analyses the pros and cons of a proposed ESM reform and reports on how the populist parties have managed, with considerable skill, to exploit the criticisms of the reform of the ESM Treaty made last November by several Italian economists – among whom was the present author - to force Italian Prime Minister Giuseppe Conte to ask for a postponement of the signing of the agreement by the Euro Summit – an informal body indicating the meetings of the Heads of Governments of the Eurozone. At the Euro Summit of June 2019,  an agreement had already been reached in principle between the Heads of Governments, which led them to instruct the Ministers of Finance to work on the details so as to finalise the agreement at the December Summit. However, at the December Summit, which was held in Brussels on 13 December, the decision was postponed, which allowed the Italian Prime Minister to avoid a government crisis.

Currently (the beginning of April), it is difficult to guess what the outcome of this saga will be. For the time being, decisions have been frozen due to the outbreak of the Covid-19 epidemic.

Click on the PDF file below to read the document.

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The reform of the ESM and why it is so controversial in Italy - WP.pdf206.32 KB