written by Camilla Alcini
ESM is the English acronym for the European Stability Mechanism, known in Italian as “il Meccanismo Europeo di Stabilità” (MES). The ESM has been a recurrent feature of Italian politics throughout the course of the Covid-19 pandemic. But what exactly is it, and why is such an animated debate taking place around it now?
Established in September 2012 in response to the damages of the 2008 Great Recession, the ESM is an EU intergovernmental organization whose main premise is doing “whatever it takes to preserve the euro”. It provides financial assistance to countries in need by accumulating capital and offering loans — the most recent example of which was the “Pandemic Crisis Support” credit launched in April 2020, which equalled 2% of each country’s GDP, with low interest rates and easy accessibility.
Given the nature of the ESM and its provisions, it is understandable why Italian politicians, overseeing a country in severe economic crisis, are drawn to the loan. But there is hardly consensus across the Italian political parties: the 5 Stars Movement (M5S) and the Democratic Party (DP) have split opinions over the loan. In fact, only the DP, Renzi’s Italia Viva and FI are pushing in favour of pursuing the MES money.
A crash course to fill you in on the situation in Italy:
In the 2018 elections, the M5S gained the majority with 32% of the votes. Together with the most popular right-wing party, Salvini’s Lega, they formed il governo del cambiamento (“the government for change”). While some objectives, such as mitigating immigration, were quickly achieved by the populists, it did not take much time for the two forces to collide on a number of issues. Arguments between Salvini, M5S leader Di Maio and Conte quickly escalated. In August 2019 Salvini, confident in the polls at the time, set off a government crisis by calling off the coalition and demanding re-election. This all ultimately ended with the creation of a second Conte government without Salvini, including instead only M5S and their new ally: the DP. This is the government, with its confusing political alliances and unstable party dynamics, that has had to face the pandemic and ensure a consequent recovery.
The debate on the ESM has been going on for months now, but it became salient in summer, when the EU reached an agreement on the Recovery Fund. The €209bn granted to Italy reaffirmed the urgent need for ESM due to the fact that assistance from the Fund will not be available for another year, whereas access to the ESM can be granted immediately.
It is no coincidence that eurosceptic parties are against taking the loan. Giorgia Meloni, leader of traditionalist right-wing party FI, called the ESM loan a “clamorous trap” that would act as a “state killer”. Salvini seems to be on the same page as Meloni, calling the ESM loan “Monopoly money.”
On the other hand, DP and FI believe that this financial support of €36bn should be used to invest in the resources needed to eventually fight other health emergencies, for instance by reinforcing the Italian sanitary structures. DP Secretary Nicola Zingaretti even wrote a letter stipulating ten good reasons to accept the funding, while FI senator Anna Maria Bernini declared that if ESM is not used, her party will not show its support and cooperation in other issues on the Senate agenda.
German leader Angela Merkel gave her opinion too. While agreeing that the decision is entirely for Italy to make, she remarked that the ESM fund is there for countries to use. This quiet intervention has inadvertently shed some light on the very core of this debate: Italy has an economic decision to take that resonates politically, and makes a point on the future of Europe and the role of Italy in it. If Italy, the country providing the third highest contribution with 17% of the fund, does not take advantage of ESM in such an extreme condition, what is the point of having it at all? The EU provides financial help for extreme situations, and the pandemic is arguably the most perfect example of one. If even these conditions are insufficient reasoning for the Italian government to accept assistance, it raises questions as to whether Italy’s place in the Union has any substantial meaning, or is merely a formality.
If the ESM is an operation of solidarity, it means that countries in need should take advantage of it with no shame, no fear of the future, and no anxiety around the possibility of being deprived of their sovereignty. But it is with these exact sentiments that politicians opposing ESM assistance are approaching the decision. It feels like Italians are suddenly scared of the EU taking advantage of their present weakness, rather than welcoming the aid that they themselves have played a role in providing.
Therefore, there is one overarching question left unanswered. Why is Italian politics at this point, and how did it get here? Perhaps it is the eurosceptic populists taking over, replacing politicians with caricatures and constructive policies that could contribute to a strong national and European identity with empty slogans. Or maybe, as populism gains momentum and Brexit deadlines near, this case provides a wake-up call for all of Europe — not just Italy.
It is abundantly clear that the ESM does not come without accounting for its complex and controversial details. This debate started as an economic one, in which most experts declared their support for an Italian claim, but then developed into something much more significant: a political decision that will show where the Italian government stands on the European Union. What this means for Italy’s post-lockdown recovery or its future in the EU is difficult to tell: right now, it all just looks like a MESs.
Camilla Alcini is a BA Philosophy, Politics, and Economics student at King’s College London. This piece was edited by Alice Palmer and Iman Shaikh.