Italy’s lower house of parliament voted against the much-anticipated reform of the euro zone bailout fund, casting uncertainty over the ratification of an EU treaty designed to aid failing banks.
This vote underscored the strong opposition within Prime Minister Giorgia Meloni’s ruling coalition towards the proposed overhaul of the European Stability Mechanism (ESM), a reform that has gained approval from all other eurozone countries except Italy.
“For the next six months, there will be no discussions about the ESM,” stated Ylenia Lucaselli, a representative from Meloni’s nationalist Brothers of Italy party.
Deputy Economy Minister Maurizio Leo emphasized the sovereignty of parliament, asserting that the government must acknowledge its decision.
Notably, Meloni and Economy Minister Giancarlo Giorgetti were absent from the chamber during the debate and subsequent vote. The outcome saw the rejection of ESM reform by 184 votes against, 72 in favor, and 44 abstentions.
The Brothers of Italy party and Giorgetti’s League both voted against the reform, while the main coalition group, Forza Italia, abstained. The opposition 5-Star Movement, led by former Prime Minister Giuseppe Conte, also opposed the motion.
The ESM, designed to provide support to euro zone governments cut off from markets or to recapitalize banks and offer precautionary credit, faces skepticism from several Italian parties fearing it could lead to a restructuring of the country’s substantial public debt.
Although the original ESM remains operational, it cannot support the Single Resolution Fund, responsible for addressing troubled banks, without Italy endorsing the proposed reform.
Earlier on the same day, the ruling coalition in the budget committee also voted against ratification, citing concerns that the treaty lacked provisions guaranteeing parliamentary involvement in potential requests for assistance.
Meloni has consistently criticized the ESM for mandating austerity or financial reform programs in exchange for aid, expressing concerns about an increased risk of debt restructuring.
The ESM vote occurred a day after EU member states reached an agreement on more lenient fiscal rules. Meloni acknowledged the improvements in the new Stability and Growth Pact but expressed disappointment that it did not exclude strategic investments from countries’ deficit and debt calculations.
The Italian government had previously indicated that it would withhold approval of the ESM treaty unless an agreement on the stability pact was reached first.
