Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Meloni’s main problem with the EU is spending its cash

Meloni’s main problem with the EU is spending its cash

Italy’s issues around spending COVID recovery funds could spell disaster for its economy — and Brussels’ reputation.

When Giorgia Meloni, the leader of a party with fascist roots, burst onto the EU political stage after winning elections last fall, quiet dread infiltrated Brussels.

She arrived in office shamelessly anti-immigrant, trumpeting “traditional” families and armed with a track record of Euroskeptic statements. A clash with Brussels was undoubtedly imminent.

Six months later, however, Meloni’s culture wars are not Brussels’ main headache with Rome — even as she pushes them back home. Instead, it’s about the money.

Rome is struggling to meet the terms and conditions Brussels has attached to billions in euros earmarked for Italy from the EU’s COVID recovery fund. Going forward, Meloni wants to renegotiate those terms to free up that money. But Brussels is still waiting for concrete plans that require its approval, as well as that from other EU countries.

While the battle may seem bureaucratic, this impasse carries major ramifications for both Meloni and the EU. Italy is the EU’s third-largest economy, and a failure to use that money could further drag down a country already battered by a generation of underinvestment and low growth.

It would also call into question the EU’s norm-breaking decision to collectively take on hundreds of billions of joint debt to help countries bounce back from the pandemic. Italy, slated to receive over a quarter of the massive €724 billion recovery fund, stands to be the biggest recipient in this decision.

If Italy fails to spend the money — and do so effectively — this will cast a shadow over the whole endeavor. Meloni will have squandered free billions, and EU countries will think long and hard before agreeing to any more debt-funded aid.

“It’s clear that two things need to happen in order for this to be a success: The first is that the money is spent, and the second is that the money is spent well,” said Nils Redeker, co-director of the Jacques Delors Centre, a think tank in Berlin.


It's the money, stupid


As Italy's new prime minister passes her six-month mark in office, many in Brussels are wondering what all the fuss was about.

“Meloni has been pretty quiet,” said one EU diplomat from a large member country, who spoke on condition of anonymity in order to freely discuss international dynamics. “It’s certainly been a surprise.”

Some of this comes down to personality and Meloni's canny knack for political messaging, which has helped her ascend Italy’s political ladder.

But unlike some other nationalists, Meloni doesn’t deploy megaphone diplomacy when in Brussels — opting instead to mostly speak in the private setting of the European Council, where EU leaders gather away from the media’s prying eyes.

She has also benefited by arriving in Brussels at a time when other EU countries are moving toward her hard-line stance on migration.

Meloni has pushed to limit same-sex parental rights. Meanwhile, one of her close political allies recently echoed white supremacists speaking of “ethnic replacement,” and yet another made inflammatory comments over the country’s fascist past.

While Meloni’s conservative crusades back home have been alarming many in Brussels, such issues are largely not the EU’s remit.

Instead, the most titanic clashes between Rome and Brussels are over a classic family issue: money management.

The EU has determined that Italy will get a staggering €191.5 billion from the post-pandemic fund. But Meloni’s management of that windfall is raising eyebrows in Brussels.

Most visibly, there are the sports stadiums. The government wanted to use some of the money to rehabilitate Florence’s 98-year-old arena and build a new one near Venice, but Brussels gave that a hard no. As a result, all of Italy’s the third payment under the recovery fund — €19 billion — has been delayed.

“Work is still ongoing on the Commission’s assessment of Italy’s third payment request,” said a European Commission spokesperson. "Constructive exchanges are being pursued with the Italian authorities, and further information is being provided where needed," the spokesperson added.

Publicly, Brussels is striking a conciliatory tone, with European Economy Commissioner Paolo Gentiloni insisting last month that “the points to be clarified will be clarified.” But, he added forebodingly: “The absorption of such huge resources is not easy in Italy, and therefore as the plan progresses the road becomes more demanding.”

Italy has a poor track record of spending EU funds, according to a Bruegel analysis in 2020, managing to use only 40 percent of resources during the last budget cycle. Pandemic recovery funds need to be spent by 2026 or are simply lost.

However, one Italian official who was not authorized to speak publicly stressed that more recent official EU data on the last budget cycle reflect that Italy is managing to use 65 percent of EU resources, nearly in line with the EU average.


Big spender runs into trouble


Rome had time to head off the spending spat.

Meloni campaigned last year on a promise to swiftly renegotiate the country’s post-pandemic spending plan. After she won, the Commission said it would listen — to some points.

“We’re only talking about investments, there’s no room to go back on reforms,” Declan Costello, the Commission’s second in command in its economic department, said at an event in Rome in mid-December.

Yet four months later, the Commission is still waiting to hear back from Rome.

A revised plan promised in April is unlikely to come before summer.

What’s more, Italy has requested further funding from a pool of untapped loans, without specifying how much — raising doubts given how the government is already struggling to spend what it was awarded.

The plan is entering a crucial phase: While many of Italy’s economic reforms were passed under erstwhile Prime Minister Mario Draghi, voting on laws is one thing; implementing investments is another.

So while the government can design the process to award contracts, and manage investment projects, regional and local authorities are often the ones to actually spend the money.

In other words, it takes time.

With this in mind, Raffaele Fitto — Italy’s EU affairs minister overseeing the recovery funds — has floated the idea of shifting some of the harder recovery projects subject to the 2026 deadline into Italy’s plans for its regular EU funds. That would give the country until 2029 to spend that money.

Fitto has already admitted Italy won’t be able to spend all of the recovery money in time.

“The full amount of resources,” he told Italian lawmakers earlier last month, “will not find 100 percent of its final expenditure in June 2026.”

Meloni also sent jitters through Brussels when she recently yanked control of the recovery funds away from her own finance ministry, bringing that to the prime minister’s office — a move she said was meant to accelerate the process. But others feared this will result in those with less fiscal expertise now running the show.

Fitto defended the move, saying the new setup will help implement the plan.


High stakes


Meloni can ill-afford to stumble in the bureaucratic hallways of Brussels. Losing any of the recovery money earmarked for Italy would be a disaster for her standing back home, with polling already showing the prime minister slowly losing popularity.

“No Italian prime minister can afford to waste a lottery ticket,” said an Italian official who worked in Draghi’s government, speaking anonymously in order to candidly discuss internal politics.

Also the EU’s reputation is on the line. Even though Brussels doesn’t want to cave to Meloni’s revisions or spending plans it finds objectionable, EU officials know that their gamble to take on billions in debt will only pay off if countries actually benefit.

“If there’s the perception that the [recovery fund] fails,” said Redeker, there might not be another one. “This would make any political discussion about what happens after the recovery fund much harder.”

Newsletter

Related Articles

Budapest Post
Close
0:00
0:00
Venezuela Steps Up Claim on Guyana's Essequibo Region
Spain's First AI Model Earns Up to $10,000 Monthly
German Cabinet Works to Address 'No-Debt' Crisis After Court Outlaws Budget
Former President Restricted from Leaving Ukraine Amid Alleged Plan to Meet Hungary's Viktor Orban
Spain soccer kiss: Furore grows as prosecutors launch probe against federation chief
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Greek PM offers tourists affected by wildfires a free stay in Rhodes next year.
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
How “peacekeepers” at the UN spend our American tax dollars.
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
Swedish Embassy in Baghdad Engulfed in Flames Amidst a Firestorm of Protests
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Muslim Tycoon Asif Aziz Receives Approval for the Transformation of the iconic London Trocadero Landmark into Mosque
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
×