"At the moment, the procedure of sanctions against Italy due to the debt is justified." The letter sent to Brussels by Italian Prime Minister Giuseppe Conte is not enough to shake the confidence of European commissioner for economic and financial affairs Pierre Moscovici. The Italian Prime Minister's response was cold-hearted: What is written in the letter does not mean that we defy the current restrictions, but our ideal candidate for European Commission presidency is the one who leaves room for a change in the EU rules. He also stressed as follows: "Living in an integrated system of axes, we must confront global challenges, but within the EU the rules have to be the same for all. I'm ready to compete but everyone should have one and the same weapons."
According to Stefano Silos Labini, one of the authors of the study titled "Free fiscal money: exiting austerity without breaking up the euro", European restrictions do not allow for an active economic policy. That of the Conte government, like those of his predecessors, retains the original accumulation, which depletes rather than adds resources to the real economy. Therefore, the famous economist believes that Italy is still not close to recovery. Moreover, it has never got over the economic crisis of 2007/2008.
- What's the solution?
"Tax credit certificates. Those are tax inducements that are not refundable upon expiration and do not therefore impose any euro repayment obligations on the state. For this very reason they are classified as 'non-payable tax credits' that do not entail an increase in the emission debt. Moreover, it is not a currency, but tax securities.
The trick Brussels uses to block them is to argue that if they are circulated and exchanged – that is, if there is an unlimited possibility of shifting tax benefits corresponding to deductions, – this could actually ensure that these bonuses turn into negotiable financial instruments with a risk of reclassifying them and the subsequent bonuses for a negative and immediate impact on fiscal balance. The snag is that the static type definition is converted into a dynamic interpretation, which is not specified anywhere.
A fiscal currency, as a complement to the euro, would actually and effectively provide for introducing additional purchasing power into the economy, avoiding loans from financial markets. Today, the real GDP of Italy is below the level of 2007/8 accounting for 80 billion euros, but the prospects are hardly encouraging, without room for maneuver. On the contrary, CCF would have a certain monetary value and, being an internal payment instrument for state institutions, could stimulate the growth of demand and even domestic production."
- At a central bankers' meeting in Sintra, Portugal, ECB President Mario Draghi once again brought forward the quantitative easing program and did not strike out further tax cuts to stimulate the economy, given the "geopolitical factors, the growing threat of protectionism and vulnerabilities in emerging markets." How do you assess Draghi's actions?
"Mario Draghi continues the line he followed in 2012, when managing to avoid a collapse of the euro zone by means of an expansionist monetary policy. However, an intervention of this kind may help avert collapse but is unable to reset the economy, especially in countries with high debt ratio, unless accompanied by an expansive budgetary policy able to actuate linkage between a complementary currency and the real economy. Quantitative easing without active recovery is still present at banks that, in turn, keep the loan down, given the lack of growth expectations. Anyway, amidst the current state of the euro zone, quantitative easing is the sole option to intervene: fiscal policy is being actually blocked, and as soon as the deficit increases, letters will start coming from Brussels that will oblige to impose counterproductive tax restriction measures that, as the Monti cabinet has already done, stifle the economy and increase the weight of income debt, instead of helping expand domestic demand. In his response to Brussels, Giuseppe Conte agrees to comply with EU restrictions but asks for new rules of economic management. And with that he only recaps all that we have been saying for years. In fact, the present-day expansion of domestic demand is hampered by the sanctions policy widely applied at the international level, while the European agreements are the first thing to be changed, which is an extremely complex and time-consuming procedure requiring the consent of the 19 euro zone member states. And the current European constraints deny the government enough room for maneuver."
- According to head of the Senate's Finance Committee Alberto Bagnai, Italy is being blackmailed, with Brussels obviously needing to create a situation where Italy becomes a blackmailed state: if you fail to accept our terms, you will be exposed to sanctions procedures. Is this Italy's real stance in the European Union?
"Brussels prefers that Rome remain under nonstop pressure. Italy is a country to defy the rules, they say. In fact, the Italians have been showing a structural primary surplus for nearly 25 years. So what does Brussels want after a giant privatization operation which has affected the entire Italian Peninsula? The real problem is that Brussels' formulae are inoperative. But let's not forget that Italy is a tough competitor for many countries, especially in the manufacturing sector. On the other hand, those urging to follow EU rules are often the first to break them; and way more unscrupulously."