Italian Prime Minister Matteo Renzi insisted on Friday that the EU’s budget rules should be interpreted flexibly and that austerity should not be seen purely as an end in itself.
Speaking at a joint news conference in Berlin with German Chancellor Angela Merkel, Renzi said, “I am of the belief that austerity doesn’t work on its own and can actually lead to the collapse of governments.”
Tensions between Rome and Berlin flared at the 17-18 December EU summit on energy, banking and migration policy, as Italy blocked the Union’s plans to provide €3 billion in aid to Turkey. Renzi argued that Italy’s contribution (around €300 million) should be exempted from the public deficit.
“We are not demanding a change in the rules for Italy. We are demanding that the rules be applied,” Renzi said. “Flexibility was a promise” made by European Commission President Jean-Claude Juncker, the Italian government chief said. “And I don’t think he has changed his mind.”
Renzi argues that budgetary austerity in Europe is putting the brakes on economic growth in his country. He had previously clashed with Juncker on the matter, who responded that “In truth, Italy should not criticise [the Commission] too much. We have introduced flexibility against the will of member states who some say dominate Europe.”
“I don’t know whether we share the same opinion on this,” Renzi said, in comments directed at Merkel. “But we say these things with a smile and we share the same ideals” such as fighting unemployment as a way of stemming a rise in populism.
Merkel, for her part, praised the economic reforms Renzi has implemented so far – such as those on the labour market – describing them as an “important contribution for Italy and for Europe.”
Regarding budgetary discipline, Merkel said that “there can always be different interpretations,” and said it was ultimately up to Brussels to decide whether Italy was adhering to its commitments laid down by the EU treaties.