The bulk of the Recovery Plan’s massive investments are in the form of the Eurobonds with which the European Union plans to stimulate the continent’s post-pandemic economy. Nevertheless, their introduction – a proposal dating back to the late 1980s aimed at encouraging investments and infrastructure – could represent a veritable paradigm shift in EU policy. Fostering that, in the first place, would be the continent’s strategic autonomy in a range of sectors currently in need of a common vision with regard to protection and enhancement. Moreover, the issuance of community debt could work to the benefit of the European financial market, accentuating the euro’s global role also in the energy transition, given that the issuance of “green bonds” is going to be central to the Recovery Plan.
In brief, the challenge is to give a budget policy to a Union that has thus far confronted crises by leaning on the ECB and monetary policy. A change in this sense would also facilitate support for a European project that over recent decades has shifted increasingly toward a mere monetary union rather than a response to the needs and consensus of the people.
The outcome, however, is far from certain. The main factor in ensuring that Eurobonds become a structural element in European unification – and not solely a post-Covid mechanism – will be the success of the Recovery Plan. As the country that has received the lion’s share of subsidies and requested the most in loans, Italy has a pivotal role in this process. In the past, European constraints have aided the alignment of Italian society and policy makers with Union expectations. However, the medium term effort required by this new plan differs significantly in its insistence on the resolution of structural problems, starting with what are historic shortfalls in execution.
Thus, Eurobonds should not be viewed as the result of Italy’s historic demands; nor are they a way to share out the country’s massive debt. Rather, they are a goal to be achieved by demonstrating responsible and effective management of the funds received. Only in this way can the common debt accumulated as the result of the recovery be transformed into a structural pillar capable of sustaining even the most fragile economies in future moments of strife. With a rising debt and increased inflation at the door, Italy has every reason to make sure these prospects become a reality.