A war of words between the EU and Italy over its budget plan escalated on Monday, as Brussels reminded the government in Rome that its proposal must meet the bloc's rules. The future of the euro could be at stake.
Image: Reuters/M. Rossi
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Italy accused the EU of "economic terrorism," as its row with economic leaders in the bloc deepened on Monday. EU finance ministers warned Italy that it must abide by EU rules on public spending.
The war of words between Rome and Brussels is centered on Italy's new budget proposal, which seeks to increase spending and cut taxes, but would raise Italy's debt and breach EU budget rules.
"There are European institutions playing at bringing terrorism to the financial markets," said Italy's Deputy Prime Minister Luigi Di Maio who heads the populist Five Star Movement (M5S).
'One crisis was enough'
Italy's budget proposal has bred market anxiety and sparked fears of an Italian debt crisis. The country's public debt stands at 132 per cent of gross domestic product, the second-highest debt-to-GDP ratio in the eurozone.
"It is up to the Italian government to show that it has a sustainable and credible budgetary plan," said Eurogroup chief and Portugal's finance minister Mario Centeno.
European Commission President Jean-Claude Juncker said late Monday that Italy must be treated "strictly and fairly" to prevent a new crisis.
"One crisis was enough, and we have to prevent Italy from being able to get a special treatment here that, if everybody were to get it, would mean the end of the euro,"Juncker said.
Italy's Interior Minister Matteo Salvini rejected the remarks and remained defiant. "In Italy, nobody is buying the threats of Juncker, who is now comparing our country to Greece," he said.
Salvini defended the proposal saying it his government merely sought to prioritize people's rights to work, security and health.
EU Economic Affairs Commissioner Pierre Moscovici will be responsible with evaluating Italy's new budget, which is set to be submitted to Brussels on October 15.
Rome could face punitive measures by its EU partners if it goes through with a budget plan that breaks the bloc rules on running excessive deficits and high debt.
Italy's populist government: Key players
After months of negotiations, Italy finally has a government with Giuseppe Conte at the helm. Conte's swearing in ended weeks of turmoil that rocked financial markets, but concerns among Italy's EU partners remain.
Image: picture-alliance/ROPI
Conte: Novice at the helm
Giuseppe Conte, a little-known law professor with no political experience, was picked by the League and 5-Star Movement (M5S) as their candidate for prime minister. He was forced to temporarily give up his leadership bid after the parties' cabinet selection was initially blocked. However, after the two parties struck a deal with President Sergio Mattarella, Conte was eventually sworn in on June 1.
Image: picture-alliance/dpa/S. Lore
Mattarella: President with the final say
President Sergio Mattarella faced calls for his impeachment after he prevented the populist alliance from taking office. He singled out its choice for finance minister, Paolo Savona, warning that an openly euroskeptic minister in that position went against the parties' joint promise to simply "change Europe for the better." After the parties agreed to replace Savona, Mattarella gave the go-ahead.
Image: Getty Images/AFP/A. Solaro
Di Maio: Anti-austerity advocate
M5S chief Luigi Di Maio secured his party 32 percent of the vote in the March election. With the populist M5S-League coalition in power, Di Maio assumed the role of joint deputy prime minister and took over the economic development portfolio. The M5S leader has come under fire for his anti-immigration rhetoric, including calling rescue missions to save migrants from drowning a "sea-taxi service."
Image: Getty Images/AFP/T. Fabi
Salvini: 'The Captain'
Matteo Salvini is the leader of the anti-immigrant, euroskeptic League, which won 17 percent of the vote in the March election. A former MEP, he and his party have no experience in governing. Salvini has taken on the position of interior minister within Conte's Cabinet. Known for his hostile rhetoric toward immigrants and the EU, Salvini once described the euro a "crime against humanity."
Image: picture-alliance/AP Photo/A. Di Meo
Savona: Anti-euro radical
Paola Savona, initially tipped to lead the Finance Ministry, has called the euro a "German cage" and said that Italy needs a plan to leave the single currency. The 81-year-old's stance won him the backing of most Italian lawmakers but that wasn't enough to stop his appointment being vetoed. In his place steps Giovanni Tria, an economics professor without any previous government experience.
Image: Getty Images/AFP/F. Frustaci
Cottarelli: Temporary caretaker
Carlo Cottarelli was set to become Italy's caretaker prime minster after the M5S-League alliance failed to have its controversial cabinet picks approved. The former IMF economist's time in the spotlight was short-lived, however. Political uncertainty in Italy rocked Europe's financial markets and prompted Mattarella to swiftly renegotiate and approve Salvini and Di Maio's governing coalition.
Image: picture-alliance/NurPhoto/S. Lore
Berlusconi: Vanquished enabler
Silvio Berlusconi (right) and his Forza Italia entered a four-party electoral alliance including League in the March election that secured the bloc 37 percent. Berlusconi is now upset at his right-wing ally Salvini after the League leader moved to work with M5S. Berlusconi has said he would act as a "reasonable and scrutinizing opposition."
