Italy’s EU minister to Commission: Be ambitious with corona recovery fund

Enzo Amendola doesn’t want to see a compromise between France and Germany and the so-called frugal four.

The European Commission should come up with an ambitious proposal for a coronavirus recovery fund and not simply act as a mediator between the two rival camps of member countries, according to Italy's EU affairs minister.

“Now it's [the] time of the Commission and the Commission should take care of their own proposal," Enzo Amendola told POLITICO in a telephone interview. "What we are expecting is an ambitious plan," he said, and for the Commission to "lead this recovery plan."

“I don't think that the proposal should be a mediation between the French-German and the frugal one," he added. On the contrary, it "should be the Commission proposal, according to what they want to achieve.”

The EU's response to the pandemic has resulted in a split over whether the best way to help is by using grants or loans.

Last week, Berlin and Paris agreed on a blueprint for a €500 billion recovery fund to help the countries hardest hit by the pandemic get back on their feet, a proposal that would allow the Commission to borrow cash on financial markets and then distribute it in the form of grants. But the EU's so-called frugal four — Austria, Denmark, the Netherlands and Sweden — reacted by pushing their own "loans for loans" solution.

What is important for Rome "is not to have, as the frugals proposed, just loans, but to have a majority of the amount of resources with grants, as the French-German proposal put on the paper,” said Amendola, who is a member of the center-left Democratic Party, which is in a governing coalition with the 5Star Movement.

“We are not against the loans, but as [the President of the Bundestag Wolfgang] Schäuble said, loans at this moment ... are stones in the European Union economy," because they would aggravate the situation for already heavily indebted countries, Amendola said, quoting a recent interview with Schäuble, a former finance minister who is one of Germany's most prominent fiscal hawks.

Former Italian Prime Minister Enrico Letta said in an interview that he prefers to use the French word radin (stingy) to describe the frugal four. Amendola refused to use the same word, but he criticized them for looking back rather than forward. The "object of the recovery fund is to fight the recession and to work on the capability of the European Union to be competitive in the future," he argued. For this reason, "I felt the frugal document to be defensive, just focused on the revenue of the MFF," the EU's long-term budget, and not focused on realities since COVID-19 "changed the landscape."

To make the recovery plan attractive to the frugal countries, the Commission has reportedly floated the idea of linking the funds to the European Semester, a regular health check on the bloc’s national economies.

Critics have doubts that Italy, whose economy has barely grown since it joined the euro area in 1999, is able to push through the reforms it clearly needs.

But Amendola argued that Rome wants the recovery fund also because it provides an opportunity "for everybody to make reforms" and stressed that "our government will present, in the next week, a big deal in order to change the administration of our country, and also to improve the digitalization of the public administration, in line with the European Commission agenda, and also the Green Deal."

He said this is not "an adventure, but it's the reality of what we are doing in our country."