Paulo Roberto de Almeida
Italy Rejects E.U. Warnings
By JAMES KANTER
The New York Times, November 22, 2013
BRUSSELS — Finance ministers from the euro area pushed Friday for centralized management of the currency bloc even as Italy rebuffed warnings from European Union authorities about their finances.
The tensions over Italy’s budget grew after Enrico Letta, the country’s prime minister, warned Friday that “ayatollahs” in Europe were seeking to promote austerity even though it was killing Italy’s chances of recovery.
The finance ministers’ meeting in Brussels came one week after Olli Rehn, the E.U. commissioner for economic and monetary affairs, warned that Italy and Spain faced debt and deficit problems under their current spending plans for 2014. The main topic on the agenda was whether the verdicts by Mr. Rehn, who has gained authority to review national spending plans, should be followed.
“Some countries may have to do more, and we will discuss all these countries,” said Jeroen Dijsselbloem, the head of the group of ministers from countries using the single currency. “I think part of the process is also that we question each other on what further measures could be taken and about how the ministers assess the risks in their budgets.”
Italy has pushed back hard against Mr. Rehn’s findings and his refusal to grant the country an exemption that would have enabled it to spend additional billions of euros already included in its budget for next year, saying that he failed to take into account revenue from privatizations and a spending review.
Mr. Rehn dryly rebutted Mr. Letta’s “ayatollahs” comment, rejecting any suggestion he was too tough on Italy. “I trust Mr. Letta meant the negotiations on the Iranian nuclear program,” Mr. Rehn said in an interview Friday with the Finnish broadcaster Yle. “It is very important that all E.U. member states, including Italy, aim at the stability of their public finances.”
Fabrizio Saccomanni, the Italian minister of economy and finance, reiterated Friday that his country’s budget would not need to be modified to comply with the commission’s recommendations. In recent days, Spain has also said the warnings from Mr. Rehn were overdone.
The meeting of the finance ministers was part of a newly introduced process in Europe of vetting budgets of euro area members before they are approved by national parliaments.
European Union states agreed to the new system seeking to do a better job enforcing rules on deficits that were flouted during the past decade by major countries, including Germany. Those lapses were widely seen as setting a bad example to Greece and others that had far more vulnerable economies.
“For European insiders, today’s Eurogroup meeting is historic as it marks the next step of the first implementation of the euro zone’s new fiscal surveillance framework,” said Carsten Brzeski, a senior economist in Brussels for ING Bank. Even so, the commission was being “very cautious in using its newly won powers.”
Mr. Brzeski was referring to Mr. Rehn’s decision earlier this month not to require Italy, Spain or any other country to revise their budget plans.
Concerns about Italy and Spain come amid scant signs that market stability in Europe over the past year is translating into a solid and sustained economic recovery. The euro zone emerged from recession in the second quarter of this year, but growth has since been barely perceptible.
There are also growing concerns about France, which has the second-biggest economy in the euro area. The French economy contracted 0.1 percent in the July to September period, disappointing hopes for a sustained recovery just months after the country broke out of a shallow recession.
Pierre Moscovici, the French finance minister, said Friday that his country was pursuing a vigorous economic policy that would promote growth and allow France to meet an E.U.-mandated target for a budget deficit of less than 3 percent in 2015.
Mr. Moscovici also said meetings of euro area ministers needed a permanent, long-term president — rather than a part-time chairman like Mr. Dijsselbloem — as another step toward formalizing and enhancing management of the currency bloc.
“We have to improve the governance of the euro zone,” said Mr. Moscovici, who noted that the move to appoint a full-time head for the euro zone meetings already had the support of Italian and German leaders.
