Trade

Can running EU economy be an Italian job?

Paolo Gentiloni, a polished Italian aristocrat with some of the European Commissions strongest political credentials, on Tuesday received the official nomination as economy commissioner.

At first glance, it would seem to be a big win for Italy in a German-led Commission, when Rome has long been viewed as an enfant terrible of budgetary discipline. But much will depend on how far his powers range and to what extent he has to share his authority with Commission Vice-President Valdis Dombrovskis.

In her mission letter to Gentiloni, European Commission President-elect Ursula von der Leyen said that the former Italian premier would oversee the EUs all-important Stability and Growth Pact, which is supposed to ensure fiscal discipline among eurozone countries. She did, however, note that he could use “the full flexibility allowed in the rules.”

Gentiloni will also be responsible for drawing up a carbon tax at Europes borders, bringing down EU public debt levels, launching an EU investment scheme and simplifying tax regimes.

Center-right conservatives expressed immediate doubt about his fiscal prudence. Markus Ferber, spokesman for the European Peoples Party group in the Parliaments ECON Committee, complained: “During his term as prime minister, Paolo Gentiloni has not managed to get the Italian economy out of the doldrums. This kind of track record does not instill a lot of confidence that he will do better as commissioner for the economy.”

1. What are Gentilonis credentials?

Gentilonis strengths are more political rather than economic: A member of the center-left Democratic Party, hes previously served as a foreign minister and prime minister of Italy. Intriguingly, he was a far-left activist in his 20s, and started out his career as an environmental journalist in the 1980s.

Seeing Gentiloni as a safe pair of hands, Italys President Sergio Mattarella called upon him to form a government at the end of 2016 when Matteo Renzi resigned from the premiership after failing to enact senatorial reforms in a constitutional referendum. One year later, Gentiloni was the countrys most popular politician, well above far-right League leader Matteo Salvini or populist 5Stars leader Luigi Di Maio.

However, while he has always maintained a courteous relationship with Brussels and his finance minister, Pier Carlo Padoan, engaged in constructive budget negotiations with the Commission, his government ultimately failed to significantly reduce Italys enormous public debt. Brussels has threatened budget sanctions against Italy and pointed to the countrys failure to reduce its debt in 2016 and 2017, prompting the right-wing media to blame Renzi and Gentiloni who were in office during those years.

Furthermore, during his premiership, Italy signed a controversial financial agreement with the Libyan coast guard to reduce the number of migrants coming into Italy. Support to Fayez Al-Sarrajs government came at a political cost (critics accused the government of shifting the center-left government to the right) but his government was ultimately the first one to curb the number of people reaching European shores.

Gentiloni, who will turn 65 soon after his adventure in Brussels begins, received a traditional classical education and speaks fluent English and French, as well as some German. Known for his diplomatic skills, opponents call him “er moviola” — slow-mover in Roman dialect. He is particularly cautious in reading up in advance and reads all of his briefing papers, according to someone familiar with his working methods. The person mentioned that Gentiloni cautiously circles all the issues that he will be able to talk about, and separately puts a cross by those that he wont.

2. What should we expect from his mandate?

President Mattarella, who usually maintains a very low profile, said earlier this week that Italy will have a pivotal role in changing EU budget and fiscal rules.

Prime Minister Giuseppe Conte then told the Italian parliament on Monday that the biggest goal for Italys new government was to change the rules ensuring that countries in the European Union pursue sound public finances and coordinate their fiscal policies. “The EU needs to improve its policies and [it] needs better economic and fiscal governance [that will not hinder growth],” Conte said.

This approach from Conte is hardly a surprise as Italians have never been very good at complying with EU fiscal rules, and accumulated debt levels aRead More – Source

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