Author Topic: Renzi Says Secrecy Must End as EU Leaders Debate Spending  (Read 2082 times)

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Offline jujyjuji

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Renzi Says Secrecy Must End as EU Leaders Debate Spending
« on: October 24, 2014, 12:59:00 PM »
Renzi Says Secrecy Must End as EU Leaders Debate Spending

By Ian Wishart Oct 24, 2014 10:49 AM GMT+0200

Italy’s Matteo Renzi, a vocal critic of German-inspired austerity, blanked European Union calls to respect the spirit of back-room negotiations as he shifted his rhetoric up a gear in the bloc’s perennial argument over fiscal rules.

After German Chancellor Angela Merkel trotted out her line that nations must stick to deficit limits, Renzi dismissed accusations his budget risked missing spending goals and said that he’ll publish confidential communications between the European Commission, the EU executive body, and his government.

“The era of secret letters is over,” Renzi told reporters as a two-day summit got under way in Brussels. “It’s time for transparency; we won’t just publish letters in future but also what is spent in these halls of power.”

Renzi’s broadside over the state of Italy’s finances sets the tone for today’s discussion of the euro-area economy after a plunge in European stocks reminded leaders that the 18-nation region’s crisis has still to be overcome. With the economy stagnating in the second quarter and near-record unemployment in some countries, analysts including Charles Dallara, the former chief of the Institute of International Finance, say the “fixation” on deficit targets isn’t working.

Unable to agree on the pace of debt and deficit reduction, leaders have instead found themselves rallying around a plan to boost private and public investment to aid the ailing recovery - - without detailing how it should be paid for.

“Austerity measures need to be in place but together in parallel we need to invest,” Lithuanian President Dalia Grybauskaite said on the way into the second day of talks this morning.

Investment Plan

The incoming EU Commission, which starts work on Nov. 1, has pledged to free up 300 billion euros for investment over three years, something that Herman Van Rompuy, presiding over his final summit as EU president, said should be its “top priority.”

While Renzi’s shift threatens to revive a north-south political split that emerged at the height of the debt crisis between 2010 and 2013, it may make little difference to the Germans in the ideological battle about economic prescriptions with Europe confronting both high debt and possible deflation.

“There were times in Europe when the deficits were very high and we still didn’t have growth,” Merkel told reporters yesterday at the summit’s start.

“We need to learn from the past.”

Renzi’s anger is linked to the commission’s two-week examination of euro-area governments’ 2015 spending plans. Italy’s Finance Ministry published a letter from EU Economic and Monetary Affairs Commissioner Jyrki Katainen asking the government to explain a “significant deviation” from agreed targets. Renzi said he would also publish his government’s reply.

‘Strictly Confidential’

The EU didn’t push Italy to publish Katainen’s “strictly confidential” letter, the Commission’s outgoing president, Jose Barroso, told reporters before the summit.

The commission has also asked France for further clarification over its spending plan, President Francois Hollande told reporters at the conclusion of the first day of the summit in the early hours of this morning.

“There are requests for various precisions and explanations, and we will respond by the end of the week,” Hollande said. “France will respect its obligation, with flexibility, and that’s what the dialogue with the commission allows.”

In a reference to Italy’s Twitter-loving prime minister, Hollande said talks with the commission would continue “by telephone and by writing, not yet with tweets.”

Malta’s Finance Ministry said that the EU had also requested more details and Austrian Chancellor Werner Faymann said his country had received a “friendly” letter asking for more information about the draft budget.

‘Credible Compliance’

While Renzi went into the talks saying that “small discussions over decimals and commas are certainly not going to stop” the Italian reform process, Merkel emphasized the need for “credible compliance with the rules.”

Countries in the euro bloc are obliged to bring their deficits to within 3 percent of gross domestic product and reduce debt to below 60 percent of GDP. France and Italy want a more flexible approach to take into account growth that’s bleaker than previously forecast, which they say makes the task of meeting the EU’s deadlines more difficult.

Renzi’s cabinet last week passed an expansionary budget plan worth 36 billion euros ($46 billion) including tax cuts and additional spending as the government postponed its target to balance the budget in structural terms by one year to 2017.

France sees its deficit at 4.3 percent of GDP in 2015 and not narrowing to the EU’s 3 percent limit before 2017. That’s two years later than the extended deadline set down by the commission.

“It’s very important at this particular stage that we don’t return back to a financial-crisis-cum-debt-crisis by easing the rules and regulations that we’ve set up,” Finnish Prime Minister Alexander Stubb told reporters before the summit. “I think it’s very important that we’re financially prudent, that we stick to the rules.”