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MILAN

How Milan’s ‘new poor’ are struggling to afford food amid the pandemic

After a year of the coronavirus crisis, even the wealthiest parts of Italy are seeing a sharp rise in poverty rates.

How Milan's 'new poor' are struggling to afford food amid the pandemic
People queue at a food bank in Milan on March 8th, 2021. Photo: Miguel Medina/AFP

Since coronavirus swept across Italy a year ago, the line outside Milan’s Pane Quotidiano charity has grown and grown.

READ ALSO: Poverty rises to 15-year high in Italy amid coronavirus crisis

“I’m ashamed to be here. But otherwise I would have nothing to eat,” said Giovanni Altieri, 60, who has been coming every day since the nightclub where he worked was shut under virus regulations.

“I had a good salary, but I’m at rock bottom here. I have no income and live off my savings,” he told AFP.

Every day, 3,500 people turn up at the two distribution points run in Milan by the charity, which hands out surplus food it receives from a range of organisations, as well as through individual donations.

People queue for bags of food at a charity food bank in Milan on March 8th, 2021. Photo: Miguel Medina/AFP

Milan is the centre of Italy’s industrial north, and one of the richest cities in Europe. But as the pandemic has battered the country, poverty rates in the area have soared.

Some of those standing in line hide their faces with a scarf or bag, fearful of being recognised.

Many leave with several packages – one for each member of their family. Inside, there is milk, yoghurt, cheese, biscuits, sugar, tuna, a kiwi, a tiramisu and some bread.

Such sights were once rare on the streets of Milan, but across the wealthy north of Italy, more than 720,000 people have fallen below the poverty line in the last year.

Throughout Italy, the number of people in poverty jumped by one million in 2020 to 5.6 million, a 15-year high, according to national statistics agency Istat.

Italian non-profit association Pane Quotidiano (Daily bread) gives out food in Milan, on March 8th, 2021. Photo: Miguel Medina/AFP

Poverty rates are higher in the south, which has long been poorer, but at 11.1 percent, compared to 9.4 percent in the north, the gap is narrowing.

“The queues have increased with Covid, there are more young people and more undeclared workers who have no right to social benefits,” said Claudio Falavigna, a 68-year-old volunteer at Pane Quotidiano, which has been running for 123 years.

“And there are also members of the middle classes, from the world of entertainment and events,” he said.

He recognises them “as they still dress well, they are elegant – it’s a question of dignity”.

Pre-pandemic, the region of Lombardy, which includes Milan, accounted for 22 percent of Italy’s GDP.

In 2019, the region had a per capita income of 39,700 euros (47,000 dollars) a year – well above the European average.

But it was also the epicentre of the coronavirus outbreak last year that knocked Italy off its feet, and has so far left more than 100,000 people dead.

“The shock of the pandemic reduced to zero the revenues of many categories of workers, notably the self-employed, who number many in the towns of the north,” David Benassi, professor of sociology at the Bicocca University in Milan, told AFP.

READ ALSO: Why are so many women unemployed in Italy – and what’s being done about it?

And although a new citizenship income for the lowest paid came into effect in 2019 and is widespread in the south of Italy, many in the north often fall through the cracks of state support.

“Many families who fell into poverty in 2020 don’t fulfil the income and asset requirements,” said Benassi.

The worst hit are women and young people, who often have precarious jobs, noted Mario Calderini, professor of social innovation at Milan Polytechnic. 

“Women have paid a heavy price in this crisis, as have families with underage children,” he said.

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UKRAINE

Explained: Why and how Italy will pay for Russian gas in rubles

Italy has said it will comply with Moscow's demand to pay for its gas exports in rubles - so what does that mean exactly? Here's what you need to know.

Explained: Why and how Italy will pay for Russian gas in rubles

What’s going on?

At the end of March, Vladimir Putin issued a demand for countries deemed ‘unfriendly’ to Russia – including all EU member states – to start paying for Russian gas in rubles.

Poland and Bulgaria refused to comply, and Putin cut off their gas supply in retaliation. Finland has said it will join them, and is prepared to lose its own supply as as result.

READ ALSO: Italian energy company to start paying for Russian gas in rubles

Other European countries have been slower to resist. Hungary almost immediately accepted Moscow’s demands, and both France and Germany recently said that they had reached compromises that would allow them to continue receiving Russian gas without breaching EU sanctions.

The Italian energy company Eni, which is 30 percent owned by the Italian state, said in a statement on Tuesday that it was opening separate accounts in both rubles and euros with Russia’s Gazprombank “on a precautionary basis” in order to maintain its gas supply from Russia.

How would the payments work, and how is this different to what’s already in place?

EU countries would technically still be paying Russia in euros, but then authorising Gazprom’s bank to convert the payments into rubles under a system devised by Russia as a workaround that appears to circumvent sanctions.

Here’s the system Moscow’s proposing: foreign companies open two accounts with Gazprombank, the Russia’s third largest bank and the financial arm of the state-owned energy company Gazprom.

The foreign company would pay into the first account, in the currency stipulated in its contract with Gazprom (almost always euros or US dollars), but would authorise Gazprombank to convert the sum into rubles on the Moscow Stock Exchange.

Gazprom's logo on the Adler thermal power plant in Sochi. Putin has demanded that EU countries pay Gazprom in rubles from now on.

Gazprom’s logo on the Adler thermal power plant in Sochi. Putin has demanded that EU countries pay Gazprom in rubles. Photo by YURI KADOBNOV / AFP.

Gazprombank would then move the sum into the second account and make the payment to Gazprom in rubles, at which point the transaction would be considered complete.

Currently, 97 percent of all EU company contracts with Gazprom are in euros or dollars, according to Reuters. Usually, foreign companies would simply pay the energy giant directly in one of these currencies without going through these extra steps.

Why is Italy acceding to Putin’s demands?

Italy is highly dependent on Russian gas. 95 percent of its gas supply comes from imports, and 40 percent of these are from Russia. 

The country has tried to transition to other sources, most recently signing a deal to boost its gas supplies from Algeria. But despite its best efforts, Italy doesn’t anticipate being able to wean itself off Russian gas until 2025.

Eni CEO Claudio Descalzi had initially rejected Russia’s conditions, but on Tuesday the company announced that it had revised its position, saying the decision to open the accounts with Gazprombank was “taken in compliance with the current international sanctions framework”.

Is it a violation of EU sanctions?

The EU seems to be equivocating about whether the scheme is in breach of the bloc’s sanctions against Russia.

On May 13th, the European Commission reportedly issued revised guidelines to member states indicating that they could continue buying Russian gas without violating EU rules – but didn’t address Russia’s demand that buyers open an account in rubles.

READ ALSO: Italy builds first offshore wind farm amid push for energy independence

The EU has yet to issue clear guidance on whether complying with Putin's demands would breach its sanctions.

The EU has yet to issue clear guidance on whether complying with Putin’s demands would breach its sanctions. Photo by Alexander NEMENOV / POOL / AFP.

On Wednesday, however, Commission Vice President Frans Timmerman warned Italy that opening the two accounts was breaking the EU’s rules, calling it “a breach of the stipulated contracts, which say what currency to pay in… The contracts say euros or dollars, never rubles.”

Italy’s Prime Minister Mario Draghi had called on the Commission to clarify its position earlier this month, saying “if there is not clarity or a line of conduct then it is clear that each company or each country will do as it believes fit.”

Why does Putin want to be paid in rubles?

To shore up Russia’s struggling economy by creating more demand for the currency, boosting its value.

By March 7th, just days after Russia began its invasion of Ukraine, the ruble’s value had plummeted by 45 percent. When Putin issued his ultimatum, it quickly rose again – though remained at 22 percent below its value of before February 24th.

The demand has also had the convenient side effect of creating chaos and sowing discord in Europe, as different EU member states with varying degrees of dependency on Russian gas have very different ideas about how the bloc should respond to Moscow’s demands.

How will this affect people living in Italy?

If Italy is allowed to go ahead with Russia’s scheme – as it has already started doing – people in Italy are likely to be unaffected by the change.

Italy would still be paying the amount prescribed in its contracts, in the currency agreed upon in the contracts, so the price paid by the end consumer would remain the same.

READ ALSO: Italy extends energy bill discount and petrol tax cuts

If the EU bars member states from complying with Russia’s demands, countries like Italy and Germany that are particularly dependent on Russian gas will be left scrambling to come up with alternative energy sources faster than they anticipated – which is likely why Brussels has been hesitant about issuing an outright ban.

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