Italy Vows To Veto EU Budget Over Migrant Clash

Europe's migrant deal that was announced to much fanfare in late June, is now history.

At least that is the interpretation of Italy, which on Sunday announced it would start the process of opposing the EU's next budget after Deputy Prime Minister Luigi Di Maio accused European member states of failing to follow through on the deal reached in June for redistributing the flood of migrants.

In a video message on his Facebook page, Di Maio said that "we will look at all measures in discussions regarding the European budget and will block what doesn’t work for us", noting that "the other states are not doing what’s not convenient for them," referring to the refusal of other countries to accept migrants who arrive in Italy by sea.

Luigi Di Maio

Italian officials have repeatedly clashed with the EU over migration, most recently over the future of 177 migrants on a coast guard vessel, the Diciotti, which docked in Sicily’s Catania port a week ago and was unloaded only over the weekend after Albania offered to accept 20 of the migrants and Ireland 20-25, while the rest would be housed by Italy’s Catholic Church “at zero cost” to the Italian taxpayer.

Italian Premier Giuseppe Conte “did well” to say on Saturday that the nation can’t follow EU budget rules as long as the issue remains unresolved, Di Maio said, quoted by Bloomberg. Migration is "just one of the battles" the government in Rome is ready to wage with the EU, he said in the video.

In a Monday interview with La Stampa, Di Maio raised the stakes when he warned that Italy is ready to "veto the budget and any dossiers where it’s possible" calculating that "between 2020 and 2027 there is 1.14 trillion in the balance."

Deputy Premier and Interior Minister Matteo Salvini - who was the first to attack the EU back in June during another standoff with a migrant ship - told Il Messaggero that there is no intention of leaving the EU. "“We’re there, but we want to re-discuss the costs of being there, given that services are ever more limited."

Discussions about the bloc’s next long term budget running from 2021 through 2027 are still at an early stage and Italy wouldn’t be the only country objecting to the proposals of the European Commission. Disagreements on the so-called multiannual financial framework wouldn’t have any implications at this stage.

As for next year’s budget, Bloomberg notes that Italy alone can’t block it, as decisions are taken by an enhanced majority of the EU’s 28 member states. If Italy withholds monthly payments for the execution of this year’s budget, that would constitute an infringement of the bloc’s laws and result into legal action by the European Commission.

Meanwhile, representatives from EU member states which failed to reach a deal at a meeting Aug. 24 in Brussels called to discuss a common approach on migration. The Brussels meeting “was only the first step” and representatives discussed a mechanism for migrants disembarking and a fast solution for the Diciotti, EU Commissioner for Migration Dimitris Avramopoulos said in an interview with La Repubblica on Sunday. “Italian politicians must put an end to the game of accusations.”

“Attacking the EU means shooting yourself in the foot,” Avramopoulos added, apparently unable to grasp that Italy was happy to do just that, especially with growing support from "core" Europe": Austrian Chancellor Sebastian Kurz called for a change to Europe’s policy of “unlimited hospitality” that has increased the number of migrants arriving, he said in an interview with Il Messaggero.

Echoing Trump, the Austrian said that Europe has a duty to save migrants but those who come illegally should be sent back to their home countries, he said.

Following the Italian threat, the EUR dipped modestly in early trading, while Italian 10Y yields initially slumped only to give reverse the entire move and trade up to 3.16%