FROM EIR DAILY ALERT
Die Welt Article Panics, ‘Italy Is Putting the Future of the EU Stability Pact at Stake’
Sept. 17, 2018 (EIRNS)—Friedrich Heinemann, head of the “Corporate Taxation and Public Finance” department at the Center for European Economic Research (ZEW) in Mannheim, Germany, as well as adjunct professor of economics at the University of Heidelberg, wrote a panicked article in Die Welt on Sept. 16, warning that Italy is going to destroy the EU Stability Pact unless the European Commission moves quickly to prevent it.
Heinemann wrote his PhD dissertation on the EU financial rules after the 1992 Maastricht Treaty which established the conditions for country membership in the single currency euro area. He remains among the “who’s who” of pro-EU think tanks and institution members.
The Italian government is cheating, claims Heinemann, in a typical racist undertone. When it appears to become “moderate” and says it will comply with the Maastricht 3% deficit rule, but in reality it is changing the subject. For indebted countries, the EU Stability Pact prescribes that they reduce the “structural deficit” to zero, by cutting it by 0.5% every year until the goal is reached. Therefore, “a higher deficit with a bare target of the 3% limit is in no way complying with the rules.”
Heinemann goes on that “the watchdog for the Stability and Growth Pact is the European Commission, which must be called to issue urgent clarifications. [EU Commission President] Jean-Claude Juncker and Monetary Commissioner Pierre Moscovici must make unmistakably clear that Italy would violate the Pact if it does not continue reducing the deficit.”
Unfortunately, he continues, Brussels is afraid of a large populist victory in the May 2019 European Parliament elections and is reluctant to give ammunition to the Lega and the Five Stars propaganda.
But “the future of the Stability Pact is at stake,” he howls.
“If the Commission is soft, the credibility of the reformed Pact is irreparably damaged and the calculation that in that way the populists can be contained is not convincing. If the Commission gives up, it shows that governments with confrontation strategies in Europe can impose their will.”
