Italian senators urged to vote down balanced budget law

Communists demand referendum on EU Fiscal Compact, denounce parliamentarians as ‘thieves of democracy’ 

A balanced budget law, the fiscal straightjacket being imposed on people across Europe, is set to be given the green light by Italian senators on Wednesday in a move described as ‘financial coup’ by Italy’s communists.

Paolo Ferrero, of Communist Refoundation and Federation of the Left, which have no parliamentarians, described the new budget rules as a ‘cultural and political aberration’ that would have prevented President Roosevelt from pursuing the New Deal in the 1930s, a policy that was central to bringing America of out the Great Depression.

Ferrero hit out both at the Government of plutocrat prime minister Mario Monti, and the parliament, where Monti’s key supporters are the two main parties, Berlusconi’s Freedom People party and the ‘centre-left’ Democrat Party.

‘This government and parliament are thieves of democracy that are distorting the rules of democracy without the people being allowed their say,’ said Ferrero, appealing to Senators not to give the backing by two-thirds of the Upper House required for changes to the Constitution.

‘The people should be able to express themselves on the issue through a referendum.’

The Fiscal Compact – Fact Box

Officially known as Treaty on Stability, Coordination and Governance (SCG), it enshrines ‘balanced budget’ legislation into national law,

This means the budget of a country must be in balance or in surplus, which means that in structural terms – that is excluding one-off items and business cycle variations – the deficit is capped at 0.5 percent of gross domestic product (GDP)

Only countries which have debt to GDP ratios significantly below 60% can have a bigger structural deficit, but not more than 1% of GDP.

The balanced budget rule must be written into national law, preferably the constitution, one year at the latest from the day the fiscal compact enters into force.

If a euro zone country does not write the balanced budget rules into its national law, it can be sued in the European Court of Justice and, if it does not comply with the Court’s ruling, it can be fined 0.1 percent of its GDP.

A country with public debt higher than the EU limit of 60% of GDP has to reduce it by one twentieth a year as a benchmark.

Transgressors face penalties of 0.1% of GDP, with fines being added to Europe’s bailout fund, the European Stability Mechanism (ESM).

The SCG will come into force once it has been passed by the parliaments of at least 12 countries that use the euro or at least by 1 January 2013.

Heads of state and government of 25 EU countries, minus Britain and the Czech Republic, officially signed the new treaty on 2 March 2012.

Ireland is the only country so far where a referendum is due to be held, on May 31. This will decide whether the government can ratify the EU Fiscal Pact.

Greece’s parliament approved the new EU treaty in March.

In France, Socialist Presidential candidate Francois Hollande has said he will renegotiate the Fiscal Compact if elected.

10 things you might not know about the EU Fiscal Compact (Corporate Europe Observatory)