Renzi clash with Juncker and Merkel escalates

Matteo Renzi [European Parliament]

The tensions between Rome and Brussels have intensified, with a tough exchange of words in the light of the unfolding refugee crisis, and a looming banking crisis in Italy.

Rome is blocking a European Union plan to provide Turkey with €3 billion in aid, claiming that the amount earmarked for the country (approximately €300 million) should be exempted from the public deficit.

>>ReadEU and Turkey agree on €3 billion refugee deal

>>ReadEU-Turkey €3 billion migrant deal blocked by Italy

Italy’s Premier, Matteo Renzi slammed German Chancellor Angela Merkel at the 17-18 December EU summit over the Union’s policies on energy, banking and migration.

Italy is currently in talks with the European Commission on whether it can be granted more fiscal leeway in its 2016 budget. But the European Commission thinks that Rome has already been given more budget flexibility than any of its partners, and that Rome should tone down its anti-EU rhetoric.

Pierre Moscovici, the EU’s Economic Affairs Commissioner, said he could “never understand” Italy’s negative approach, given that the Commission has said it will consider Rome’s requests for budget flexibility, even though these go beyond most of its peers.

Similarly, Renzi believes that there is a double standard in energy policy, with the executive terminating the South Stream gas pipeline project, which aimed at bringing Russian gas across the Black Sea to Italy, while Brussels does little to stop the Nord Stream 2 project, intended to supply Russian gas to Germany, across the Baltic Sea.

>>Read: Tusk joins ‘Visegrad Four’ in attack on Nord Stream 2

Perhaps more importantly, Italy has much to fear from a looming banking crisis which may prove to be a much bigger problem for the EU than the Greek financial crisis.

In the spotlight is Monte dei Paschi, Italy’s third largest bank. According to Italian media, non-performing, dubious loans held by the bank total €45 billion. New EU rules which came into effect on 1 January impose losses upon shareholders and big depositors, before public money is used.

To add insult to injury, in October, the European Commission rejected an Italian plan to create a single “bad bank” that would have taken away all of the debts held by Italian banks.

Italy has since proposed a new plan to the Commission. But it believes that Italy is attempting to transfer the risk from the banks to the Italian government – which is precisely what new EU regulations try to prevent.

Renzi sends a political message

S&D sources told EURACTIV that a series of events increased the tension between Rome and Brussels.

On 14 January, European Commission’s President Jean-Claude Juncker met Germany’s Chancellor Angela Merkel in Berlin. The following morning the chief of the EU’s executive attacked Renzi in the European Parliament.

“I think that the Italian prime minister, whom I love very much, is wrong to offend the Commission at every opportunity, I don’t see why he does it,” Juncker said. “In truth, Italy should not criticise it too much. We have introduced (greater budget) flexibility against the will of member states who some say dominate Europe,” he said, stressing that it was Juncker himself who introduced that flexibility, and not Renzi, who claimed responsibility.

Fuel to fire, and Selmayr’s scalp

Italian journalists ratcheted up the tensions, by saying that EU sources had disclosed that Juncker had complained that he had “no interlocutor” in Renzi’s Italy.

According to the Italian press, the unquoted source was Martin Selmayr, Juncker’s chief of cabinet. According to Corriere della Sera, Renzi is now asking Juncker to sack Selmayr.

On the record, the Italian prime minister hit back at Juncker’s criticism saying, “We won’t be intimidated […] Italy deserves respect.”

In addition, Matteo Renzi decided to change his top representative in Brussels, by replacing Ambassador Stefano Sannino with Carlo Calenda, the current Deputy Industry Minister.

>>Read: Renzi changes top envoy in Brussels

“The ongoing attack against Italy is not a coincidence,” the same source told EURACTIV, adding that Renzi’s decision to have a politician close to him and not a diplomat as a representative in Brussels is a “clear political message to Brussels” that Rome is ready to crash with Brussels.    

‘Undermining EU’s credibility’

The dispute between Rome and Brussels escalated further, with a statement made by the European People’s Party leader in the Parliament, Manfred Weber, who accused Renzi, a centre-left politician, of undermining the EU’s credibility.

“Renzi is undermining the credibility of Europe to the benefit of populism,” Weber hammered out at the plenary session in Strasbourg this week.

The outspoken EPP leader, who is close to Merkel, deplored that “when we see that Italy is not willing to help Turkey unless there is a trade-off, all that hurts Europe, its strength and credibility”.

‘Ridiculous’ statement

Weber’s fierce statement has triggered the strong reaction of Gianni Pittella, the head of Socialist and Democrat group in the European Parliament, who said such words were unacceptable.

“Manfred Weber’s statement against Matteo Renzi is unacceptable and ridiculous. One cannot blame the Italian Prime Minister to be willing to destroy Europe, as Renzi is surely one of the most pro-European leaders,” Pittella stated.

“He put on the table in the discussion with President Juncker concrete issues, such as flexibility and the need to boost growth in Europe. These are fundamental issues for the future of Europe to be delivered, and as Socialists, we fully share the urgent need for a quantum leap,” the official added.

Forza Italia comes to play

Aldo Patriciello, a center-right MEP from Forza Italia (EPP), said that the ongoing controversy between the Italian government and the European Commission “degrades the political debate and weakens the Italian leadership within the European institutions”.

Patriciello expressed concern about the “carelessness and short-sightedness” with which the Italian premier was dealing with European affairs.

“A great country like Italy, founder of the EU, should have a more responsible and constructive [approach], especially at a time when vital interests are at stake for the political future of the continent. Weber is right, so the EU risks losing credibility,” the Italian MEP said.

Forza Italia sources from the European Parliament told EURACTIV that the party is not against Renzi’s requests, but it feels annoyed by his “rhetoric”.

“We are annoyed by his behavior toward the EU […] we have to work with EU institutions, not fight,” the source said.

Complaints from Athens

In a recent interview with EURACTIV, Greece’s Alternate Foreign Minister for European Affairs, Nikos Xydakis, said that the three-billion-euro aid to Ankara was not a blank cheque.

>>Read: Greek minister: New EU border force should assume full control of refugees

“It didn’t get three billion. It will do so in the future. All these are “will”. They are agreed and “will” in accordance with the results,” Xydakis said.

He also criticized the European Commission for the way it managed the decision-making during the refugee crisis, especially the its resolution to award €3 billion in aid to Turkey.

“The French, but others as well, have said that it’s not possible that the Commission makes a decision, and afterward, announces to the member states that they should take money from their national budgets for something. We need another approach. Nobody disagrees with the final act or the ultimate benefit, but many disagree on the approach.”

  • 26 January: Italian economy and finance minister Pier Carlo Padoan to meet Competition Commissioner Margrethe Vestager.
  • 29 January: Renzi to meet Merkel.

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