May 24, 2018 / 2:02 PM / a year ago

Euro partners warn new Italy government against "suicide mission"

BRUSSELS, May 24 (Reuters) - Italy’s partners in the euro lined up in Brussels on Thursday to urge the new government in Rome to stick to EU budget rules or risk following Greece into financial calamity that would hurt the whole of Europe.

Arriving for a meeting of euro zone finance ministers, the hawkish Slovak representative went so far as to warn that Italy under its new eurosceptic, anti-austerity coalition risks casting itself adrift from the common currency in a manner that would do severe damage across the bloc.

“I sincerely hope that the new Italian government won’t ignore rules and take euro zone hostage for the sake of pre-election promises,” Peter Kazimir tweeted.

“That would be a very risky business.

“Should they decide otherwise and go on a ‘suicide mission’ and jump the ship instead, so be it ... but let me be clear, you’re not alone on board of that ship.”

Many others at the meeting, including EU Economics Commissioner Pierre Moscovici and French Finance Minister Bruno Le Maire, welcomed comments by Italian Prime Minister-designate Giuseppe Conte that they interpreted as signalling a willingness to remain engaged with Rome’s European Union partners.

“I’m convinced by history, by art, Italy will remain a very important member of the euro zone,” Frenchman Moscovici said.

“I am going for a constructive dialogue,” he added, insisting that the European Commission would not lecture Rome after an election in March delivered votes for The League and 5-Star on promises of spending more and taxing less.

Italy’s small southern neighbour Malta also signalled alarm at the government’s proposed programme:

“If ... it is just a question of spending and spending and borrowing and spending then unfortunately it will be a replay of Greece,” Maltese Finance Minister Edward Scicluna told reporters, referring to Athens’ effective bankruptcy in 2012.

At nearly 10 times the size of Greece’s economy and the third biggest in the euro zone, Italy is seen as far too big for Germany, France and the other 16 states in the euro to bail out.

While EU partners are waiting to see exactly what policies a new government under the political unknown Conte will pursue, many see private investors already imposing a discipline on its ambitions by raising borrowing costs sharply.

The Commission also has tools to pressure member states not to let government deficits and public debts rise above set levels but senior officials acknowledge that these have often not been applied strictly — notably to France — and that they may not be strong enough to deter a new Italian government. (Writing by Alastair Macdonald Editing by Matthew Mpoke Bigg)

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