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Coronavirus bailout is ‘an opportunity to design a better Italy’, says PM Giuseppe Conte

The €170 billion recovery fund granted to Italy by the EU is a chance for the country to invest in reform and catch up with its European neighbours, the prime minister says.

Coronavirus bailout is 'an opportunity to design a better Italy', says PM Giuseppe Conte
Prime Minister of Italy Giuseppe Conte this week. Photo: Tiziana Fabi/AFP

Italian Prime Minister Giuseppe Conte on Tuesday sought to reassure Europe that forthcoming coronavirus recovery funds would be spent wisely to revive the battered economy after a crippling lockdown.

In an exclusive interview to AFP, the leader of Europe's third-largest economy said Italy's share of the €750 billion recovery plan agreed by the European Commission would be the impetus to fix longstanding problems at home.

Economists say entrenched structural problems have put the brakes on progress for decades. They include Italy's burdensome public bureaucracy, sub-par infrastructure, including slow adoption of digital technology, and widespread tax evasion.

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“It's an opportunity for us to design a better Italy, to work on a serious, comprehensive investment plan that will make the country more modern, greener, and more socially inclusive,” Conte said.

The first European country to be hit by the coronavirus pandemic, Italy is reeling from the economic effects of a lockdown imposed in March to stem the spread of the virus that has killed nearly 34,500 people.

“I often say it's not a handout to benefit the current government, it's an investment we must make in Italy and in Europe for our children and grandchildren,” Conte said.


Conte at an EU summit in February. Photo: Aris Oikonomou/AFP

After months of wrangling among EU leaders and opposition from northern European countries, the European Commission in May agreed an unprecedented recovery plan, comprised of €500 billion in grants and €250 billion in loans. 

Under the biggest EU stimulus package in history, Italy is expected to receive €172 billion, the largest share.

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Italy and Spain had fought hard for a deal that would prioritise grants rather than loans, against the wishes of northern EU member states who insisted on a loans-only rescue package. On Tuesday, Conte had words of praise for his European partners, saying he recognised that in Germany, “there was a great internal debate” over how Europe should respond to the economic crisis set in motion by the coronavirus.

“Compared to the very rigid initial stances, there has been an improvement,” he said. “Germany has understood that it would not be appropriate for it either to have a Europe, a single market, that is so divided and fragmented.”

Conte said he and France's President Emmanuel Macron had “shared this battle from the beginning”, referring to early French support for Italy's call for budget solidarity within the EU. “We were among the protagonists of those who immediately called for a strong, solid and immediate European response,” Conte said.

As for post-Brexit negotiations with Britain, Conte said the month of July would be “crucial” but he was confident that a solution would be found “in the mutual interest of the parties”.

“Especially during this pandemic, it's of no use to the EU or to the UK if an agreement is not reached with a historic partner like the UK.”

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Conte will head to Brussels in September, where he will present a detailed plan for how the EU funds will be spent. Broad outlines of that plan are being debated at a general assembly organised by Conte that began in Rome on Saturday and is due to continue until June 21st.

With Italy's economy expected to shrink at least by 8.3 percent this year, the country's main employers' organisation has sounded the alarm, calling for serious reforms and a plan to help businesses facing potential bankruptcy.

The prime minister has invited economists, academics, unions and business associations, as well as EU leaders, saying he wanted to unite “the country's strongest forces” to come up with ideas for Italy's economic rebound while removing structural and bureaucratic barriers.

Priority areas include the green economy, investment in research and training, the modernisation of Italy's slow judicial processes, and more support for the key tourism, automobile and food industries.

“Italy has had a lower growth rate in recent years compared to other European countries. Today is an opportunity for us, with these resources, to catch up,” Conte said.

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ITALIAN POLITICS

Italian government rocked by Five Star party split

Italy’s government was plunged into turmoil on Tuesday as foreign minister Luigi Di Maio announced he was leaving his party to start a breakaway group.

Italian government rocked by Five Star party split

Di Maio said his decision to leave the Five Star Movement (M5S) – the party he once led – was due to its “ambiguity” over Italy’s support of Ukraine following Russia’s invasion.

He accused the party’s current leader, former prime minister Giuseppe Conte, of undermining the coalition government’s efforts to support Ukraine and weakening Italy’s position within the EU.

“Today’s is a difficult decision I never imagined I would have to take … but today I and lots of other colleagues and friends are leaving the Five Star Movement,” Di Maio told a press conference on Tuesday.

“We are leaving what tomorrow will no longer be the first political force in parliament.”

His announcement came after months of tensions within the party, which has lost most of the popular support that propelled it to power in 2018 and risks being wiped out in national elections due next year.

The split threatens to bring instability to Draghi’s multi-party government, formed in February 2021 after a political crisis toppled the previous coalition.

As many as 60 former Five Star lawmakers have already signed up to Di Maio’s new group, “Together for the Future”, media reports said.

Di Maio played a key role in the rise of the once anti-establishment M5S, but as Italy’s chief diplomat he has embraced Draghi’s more pro-European views.

READ ALSO: How the rebel Five Star Movement joined Italy’s establishment

Despite Italy’s long-standing political and economic ties with Russia, Draghi’s government has taken a strongly pro-NATO stance, sending weapons and cash to help Ukraine while supporting EU sanctions against Russia.

Di Maio backed the premier’s strong support for Ukraine following Russia’s invasion, including sending weapons for Kyiv to defend itself.

In this he has clashed with the head of Five Star, former premier Giuseppe Conte, who argues that Italy should focus on a diplomatic solution.

Di Maio attacked his former party without naming Conte, saying: “In these months, the main political force in parliament had the duty to support the diplomacy of the government and avoid ambiguity. But this was not the case,” he said.

Luigi Di Maio (R) applauds after Prime Minister Mario Draghi (L) addresses the Italian Senate on June 21st, 2022. Photo by Filippo MONTEFORTE / AFP

“In this historic moment, support of European and Atlanticist values cannot be a mistake,” he added.

The Five Star Movement, he said, had risked the stability of the government “just to try to regain a few percentage points, without even succeeding”.

But a majority of lawmakers – including from the Five Star Movement – backed Draghi’s approach in March and again in a Senate vote on Tuesday.

Draghi earlier on Tuesday made clear his course was set.

“Italy will continue to work with the European Union and with our G7 partners to support Ukraine, to seek peace, to overcome this crisis,” he told the Senate, with Di Maio at his side.

“This is the mandate the government has received from parliament, from you. This is the guide for our action.”

The Five Star Movement stormed to power in 2018 general elections after winning a third of the vote on an anti-establishment ticket, and stayed in office even after Draghi was parachuted in to lead Italy in February 2021.

But while it once threatened to upend the political order in Italy, defections, policy U-turns and dismal polling have left it struggling for relevance.

“Today ends the story of the Five Star Movement,” tweeted former premier Matteo Renzi, who brought down the last Conte government by withdrawing his support.

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