Gentiloni: the recovery fund is not a cake to be shared. It takes a lot of seriousness, it is an unrepeatable opportunity

Gentiloni: the Recovery fund does not

Even as a European Commissioner for the Economy, Paolo Gentiloni keeps away from the rhetoric of the proclamations. But we can immediately tell, speaking to us, that it has the exact measures of what the Recovery Plan means.

Weeks ago, it seemed impossible that you would propose common debt issues to be financed with European revenue. What has changed?
true. In 65 days the EU has covered a road that would have been considered unthinkable, if you look at the past ten years. There was a mix of protective measures by the European Central Bank in mid-March, then two dramatic choices from the point of view of rules such as the suspension of the Stability Pact and the rules on state aid. In the end, we arrived at the 750 billion euro package this week, which dramatically amplifies an element that had passed without too much awareness: Sure, employment assistance, already provided for issues of common securities for 100 billion.

What made this jump possible?
We have all defined this crisis as unprecedented since the 1930s. At that point we could not fail to have an unprecedented answer. This simple message – being up to the crisis, rediscovering the idea of ​​a Europe without good and bad, without winners or losers – has had extraordinary power. Some leaders, some women, played a crucial role. And the Commission made the right choices in incredibly short times. We have often been told that we did ‘too little, too late’: too little and too late ‘. Now we are facing enormous and very rapid decisions.

Angela Merkel had said that a Eurobond would never be made with her Registrar. Now at the head of this turn. Does it surprise you?
Not the first time he makes bold choices in historical moments. I still remember in 2015 about immigration. The Merkel-Macron agreement was basic.

Do you think that the turning point of these days can change the positions of the sovereigns?
The three months that we have behind us have been disastrous for nationalist populism, in Europe and beyond. The pandemic has highlighted the importance of science, the spirit of community, multilateralism and the European model: that mix between social protection, single market, transparency, rights, freedom. The theories about the strong man, the anti-scientific ones, those of the countries that solve everything on their own are having a terrible crisis. Covid-19 has exposed its inadequacy. Now the challenge that this awareness bears the economic consequences of the pandemic. Let us not delude ourselves that the defeat of nationalist populism is definitive.

The size of the recession has more weight than a huge European package. Do you worry?
The European package complementary to that of governments: stimulus measures on average for 4% of European GDP, plus deferment of taxes and guarantees for another 23%. Huge figures, with a potential to accentuate the differences between the countries that can do more and those that can do less. The fundamental European package to mitigate imbalances and direct resources to future needs. But I remember that there are tools available already this year: the Sure fund, the EIB guarantees, the subsidized loans of the Mes and a part – albeit minimal – of the emergency transfers that we have proposed.

So exclude an appeal to the wrong Mes?
It is not for me to decide. What I tried to do – and it was not easy – was to adapt an instrument used in the past for other objectives to new ways. Among other things, the fact that resources are huge, especially in 2021 and 2022, does not eliminate worries for the economy, because the immediate future depends on various factors.

One certainly concerns the exit times from lockdowns. What other factors do you see?
For Italy, it also matters how much our production capacity can express itself. Delays in public intervention must certainly be bridged, but let’s not forget our history: even if the intervention of the state has always been relevant, very often the strength of the economy is released regardless of the state. And if we want to start growing again and put the debt on a downward curve, we need this force to manifest itself. I speak of the production systems of private enterprises in the territories, of their strength, of their autonomy and creativity. Without, very difficult to restart the engine.

In Italy, however, there is talk of public intervention or bonuses and tax cuts thanks to the Recovery Fund. What do you think?
I don’t think it’s helpful to set the matter up as if it were about sharing a cake. And I am sure that the government, which has done well in the emergency phase, is aware of this.

What should be the approach?
You have to tune in to the real challenges of the plan. That it will be ‘made in Italy’ and should not be decided in Brussels or Luxembourg, because this was the logic of the bailouts of ten years ago. But it still remains an unrepeatable opportunity to get the Italian economy moving again. We need skills, foresight, political responsibility. I feel like saying: no Troika, let’s not say ridiculous things. For a lot of seriousness, if we want to take this opportunity.

Do you think of investments in the environment or digital?
First, but not only. The plan must ask itself the problem of the protection of the most fragile job, of active policies, of the correction of the bottlenecks that we have in the bureaucratic rules or in the justice system. In the medium and long term, debt must also stabilize and start to fall again, thanks to a strong budget surplus before paying interest. These concepts are in the last recommendation we sent to Italy and have been present for years in the reform ambition that is not lacking in the country.

Are transfers from the Recovery Fund conditional on the execution of this reform plan?
We are talking about important financial volumes and European funds still require clarity of objectives and punctuality in achieving them. Anyone who has had to deal with European money knows: the plan will not work in a different way, with great clarity, punctuality and checks. They will be done at fixed deadlines, with reports on the progress of the plans. Italy has all the economic, administrative and technical skills to succeed. If instead you think there is a cake to share, then we will waste a unique opportunity.

Christine Lagarde argues that the Stability Pact should be reviewed. What do you think?
It was an open discussion before this crisis, and will return. We estimate 846 billion less investment in Europe over the next two years due to the recession, almost all of which are from the private sector. But history teaches us that then there is the risk of a tightening in public investments. It would be exactly what we should not do.