The European Commission has launched against Italy a process of sanctioning unprecedented

The phase of the exchange of letters and reproaches left behind. The conflict between Brussels and Rome has already entered a new stage. The EU keeps open a window to the agreement that will close in two weeks, when the countries of the euro area should meet to give the green light to the proposal of the European Commission. And now, all of you close ranks after the eu commissioner for Economic and Monetary Affairs, Pierre Moscovici. “I don't see any reason to disagree with the Commission”, he insisted.

Brussels is still open to negotiation, but believes that the time has come not to overlook the violation of the rules that would imply the approval of the Budget of Italian in their current terms. The new phase that assumes the publication of a very, very difficult reports on the accounts and the debt of Italy is guided by two maxims, in the words Moscovici: “dialogue” and “cold blood”.

MORE INFORMATION Italy keeps the mule to Brussels and shall not modify the budgets to Brussels starts the process to punish the slip budget of Italy

The next Saturday Jean-Claude Juncker must show that slit open the understanding when you dine with Conte in Brussels. If you do not reach any agreement, then temperance will be required in the next meeting of the Finance ministers of the euro zone, which should endorse the Commission's plans. And from there, there will be no going back.

Brussels came out two documents to Rome. The first examination of their accounts, which is suspended by engaging in a “breach particularly serious” commitments. The second is the one that could cost him re-pass the strict scrutiny and the paper of the Commission and which could lead, ultimately, sanctions of up to 0.5% of GDP.

Italy takes five years to receive warnings about your debt. But the report of this Wednesday, as reflected in the document, is “the first step in the excessive deficit procedure”. The report points out that the country is one of the most indebted in the world, with a ballast that is equivalent to the 131,2% of GDP. After examining the deterioration they will suffer their public accounts, it concludes that Italy will continue to breach their reduction targets in the next two exercises. “We are ready to continue with the dialogue, but in this situation it is necessary to address it already,” said the Commission vice-president Valdis Dombrovskis.

The Commission believes that the plan Italian makes water from several sides. Apart Betasus from the challenge of tripling the deficit forecast, the analysis that has been carried out indicate that overestimates the effects it will have on the growth and obvious costs associated with the increase of the risk premium. “Italy provides for essentially an important additional indebtedness in place the necessary fiscal prudence,” added Dombrovskis. As did the International Monetary Fund, Brussels recalled to Italy, which, drowned in the spiral of public debt, a future crisis will only bring more austerity and less growth.

The Italian Government gave for granted the decision of Brussels on Tuesday night. So did the markets, which on Tuesday fired the risk premium to 330 points and on Wednesday lowered its virulence against the country. They seek exits to a crisis that leaves it increasingly isolated in Italy, and the prime minister Conte has stressed publicly that they will attempt to engage in dialogue and assert the benefits of its economic project to Juncker next Saturday. A meeting in which, according to sources in the Italian Government, will seek to iron out differences and “change some dynamics”.

But the game is played in various fields. And one of the collateral problems is that the shock with the Commission is breaking down silently the alliance between the League and the Movement 5 Stars (M5S), who begin to have visions of something different approach.

Cracks in the coalition

These differences have crystallized about all with the backdrop of the crucial european elections in may, where both formations will measure definitely their forces in the face of a hypothetical crisis of government, ahead of elections included. Both parties are confident that, after these elections, there is a large change in the map of alliances in Europe and that it allows for a change of partners in the Commission.

Matteo Salvini mocked right away of the reaction from Brussels: “we Now await the letter from santa Claus”. In private, however, members of the League take days opening the door to a possible amendment of the budgets before they are approved definitively by the Senate and the Congress at the end of December.

An idea of the background that shares the M5S to calm markets, the main concern now of the Government. But the discrepancy is found in the bottom of the review. The League would be willing to major touch-ups, while the grillinos don't think vary's not one of the cardinal points of his program (pension act, income of citizens and compensation fund for the “scammed out of banking”), which constitute the core of the problem appreciated by Brussels.

The debate has also reached in the Commission, which has been followed to the letter the procedure despite the internal pressures that demanded open procedure immediately. Europe seems to have taken some lessons from the Great Recession. And one of them is not to repeat the staging of the battle of the countries of the north compared to the south, which could feed more to populism ahead of the elections in may. For now, we have avoided the big fights. But all that can change in the next assault: the Eurogroup of December.

Greece leaves behind the trim pensions

Greece left behind last summer to an era of bailouts and regained the reins of your fiscal policy. The European Commission assessed on Wednesday the first plans of Athens after the rescue and gave him a outstanding. So much so that Brussels believes it is unnecessary to apply to the new crop of pensions to 2019 which had been initially agreed with the creditors on your plan for financial aid. Brussels believes that the project of Athens guarantees a primary surplus —before payment of interest on the debt— 3.5% of GDP. This proposal will also be discussed at the next Eurogroup of December.