I ask for reconsideration of the billions that Italy sends to Brussels, it’s time to cut financing to a useless entity.
That’s from Italy’s Deputy Prime Minister and Interior Minister Matteo Salvini, speaking at a party event in Pinzolo.
Salvini has now managed to create a second international incident in the space of three months, a dubious feat befitting of a man who last year extolled the “virtues” of ethnic cleansing in Italy as follows:
We need a mass cleansing, street by street, piazza by piazza, neighbourhood by neighbourhood. We need to be tough because there are entire parts of our cities, entire parts of Italy, that are out of control.
Sound like anybody you know in America?
Back in June, Salvini grabbed international headlines when he blocked a rescue boat carrying more than 600 migrants from docking and now he’s at the heart of a fresh crisis involving more than 150 migrants sitting on a coast-guard ship (the Diciotti) parked in a Sicilian port. Basically, Salvini decided it would be a good idea to effectively hold the migrants hostage until such a time as other European states agreed to take them in.
The problem with that is it’s tantamount to kidnapping, which is why Salvini is now under formal investigation for, wait for it, kidnapping. And yes, I’m serious. On Saturday night, prosecutors said they’re investigating Salvini for possible illegal detention. Here’s the Guardian:
Italy had appeared to be in violation of the European convention on human rights, which states that any asylum seeker detained for more than 48 hours should be released and given the opportunity to apply for refugee status.
An investigation into the detention of the passengers on the ship was first launched on Wednesday, by Luigi Patronaggio, chief prosecutor for Agrigento, who visited the ship and questioned its passengers. Magistrates travelled to Rome on Friday to question Salvini, members of his staff and at least two high-ranking officials in the ministry of the interior.
This farcical situation has been resolved, at least for now, after Albania and Ireland stepped up to take in some of the poor souls stranded aboard the vessel and the Italian church agreed to take in the rest of them in order to “put an end to this dramatic situation and sufferance”.
For his part, Di Maio told La Stampa that Salvini shouldn’t resign just because he’s under investigation for kidnapping 150 people. Apparently, the “ethics code” that underpins the Five Star/League government hasn’t been “violated” by local prosecutors’ investigation, which in addition to kidnapping and illegal detention, includes abuse of office. If none of that counts as a violation of an “ethics code”, one wonders what would.
Anyway, if you think back to the June standoff mentioned above, it sparked a frantic push by 17 EU countries to make some progress on the immigration front and they all gathered in Brussels for an emergency confab ahead of a formal summit held on June 28-29. The formal gathering produced a draft agreement that was short on both rhetoric and specifics. Here’s how we described it at the time:
Needless to say, the “deal” (you can read it in full below) is a bit nebulous and seems destined to suffer the same fate as previous efforts to “solve” the immigration “problem” in Europe.
Markets may be reacting more to what looks like some semblance of coordination between Macron and Conte than they are to the prospect that anything has actually been resolved.
Officials gathered in Brussels again late last week to talk immigration as the Diciotti spat drug into its fifth day. The ship was rescued at sea on August 15 and docked on August 20.
Well, suffice to say Salvini and Conte and Di Maio aren’t satisfied with the progress, so now, they’re threatening to veto the E.U. budget and just generally be a pain until they get what they want.
“Italy doesn’t think it’s possible to adhere to an estimated budget underpinning a policy that it’s so incoherent from a social standpoint,” Conte said in the statement announcing that Italy has decided to release the Diciotti hostages. “The spirit of solidarity is failing to translate in concrete acts”, he added.
This comes ahead of a closely-watched budget announcement due next month and needless to say, none of the above bodes particularly well for that.
Of course what Conte and Salvini are suggesting is illegal. Literally. They have to fund the E.U. budget. “This has been ratified by all member states, so it applies to all EU member states”, Angela Merkel’s spokesman Steffen Seibert said flatly, when asked about Italy’s threat by reporters on Monday.
Keep in mind that this is the same bunch in Italy who recently implored the ECB to insure its bond market against “speculative attacks”. So if they have their way, they’ll get to veto the E.U. budget, throw the fiscal rule book out the window next month and then benefit from what amounts to an E.U. subsidy when investors try to punish them for this insanity when the country tries to borrow in the bond market. Little wonder the BTP-bund spread remains stuck at its widest levels since the May BTP meltdown.
If all of the above sounds crazy to you, that’s because it is and it might be time for Brussels to tell Salvini the same thing Salvini is telling Brussels. That is, maybe the nefarious eurocrats should tell Italy the following with regard to ECB purchases of Italian debt:
It’s time we cut financing to you because you’re a useless entity.
On the bright side for Europe, German business confidence jumped for the first time in nine months in August. The expectations gauge rose as well.
Remember, the Eurozone’s economic fortunes seem to be improving after a sharp slowdown in the activity data in Q1 raised questions about whether a downturn was in the cards. As noted last week, the Citi economic surprise index for Europe turned less negative than for the U.S. for the first time since Q1 this month.