Italy's Di Maio says "pragmatism" comment referred to EU, not ESM

Italy must be “pragmatic” in talks with the EU over aid tools, Foreign Minister Luigi Di Maio said on Saturday, denying that an earlier comment in a newspaper interview referred to the use of the European Stability Mechanism (ESM) bailout fund.

Di Maio’s remark in the La Stampa daily appeared to signal a shift in the position of his ruling 5-Star Movement, which has threatened to bring down the government if it opts to seek financing from the ESM.

The ESM intergovernmental fund has doled out money in the past with painful financial conditions attached, in line with demands of the Netherlands and other wealthy northern states.

“I’ve never said we must be pragmatic on the ESM, which we continue to see as an inadequate tool, I said instead we need to be pragmatic in European negotiations,” Di Maio said on Twitter.

Asked in the interview published in Saturday’s La Stampa whether 5-Star no longer opposed the ESM, Di Maio said: “On one side we have those who root against Italy, and I find that disconcerting. On the other there are those who see the ESM as the national panacea. That’s not true either. We must be pragmatic. This is the game of our life and it’s not over yet. Actually, it has just started.” He did not elaborate further.

The 5-Star Movement, along with Italian Prime Minister Giuseppe Conte, have been calling for the creation of “coronabonds” that all eurozone members would underwrite to share out the huge burden of economic recovery.

European Union leaders agreed on Thursday to build a trillion-euro emergency fund to help recover from the coronavirus pandemic but they postponed any decision on divisive details until the summer.

The accord has been portrayed in Italy as a major victory, though it stopped well short of the “coronabonds” option preferred by Rome.

Italy has suffered more coronavirus deaths than anywhere else in Europe and the crisis is ravaging its already fragile economy, making it essential to find new avenues of finance to help pay for the eventual recovery effort.