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President readies Italy for snap polls to be fought over EU and #euro

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Italy’s president set the country on a path to fresh elections on Monday, appointing a former International Monetary Fund official as interim prime minister with the task of planning for snap polls and passing the next budget, write Steve Scherer and Alberto Sisto.

The decision to appoint Carlo Cottarelli to form a stopgap administration sets the stage for elections that are likely to be fought over Italy’s role in the European Union and the euro zone, a prospect that is rattling global financial markets.

The euro zone’s third-largest economy has been seeking a new government since inconclusive March elections, with anti-establishment forces abandoning efforts to form a coalition at the weekend after a standoff with the head of state.

President Sergio Mattarella vetoed the parties’ choice of a eurosceptic as economy minister, prompting the 5-Star Movement and far-right League party to accuse him of betraying voters.

Both parties dropped drop their plan to take power, switched to campaign mode, and 5-Star called for street protests against the president’s rejection of their nominee, 81-year-old Paolo Savona, who has argued for Italy to quit the euro zone.

Cottarelli told reporters after his appointment that elections would be held in the autumn or early next year. He also tried to reassure investors on the Italian economy.

“Speaking as an economist, in the past few days tensions on the financial markets have increased,” said Cottarelli, who had served as a cost-cutting tsar to a previous government.

“Nonetheless the Italian economy is still growing and the public accounts remain under control.”

The prospect of fresh elections raised fears among investors that the vote could become a de facto referendum on Italy’s euro membership. The euro touched a fresh six-month low and yields on Italian debt climbed, increasing the extra borrowing costs or spread that Italy pays in comparison with Germany.

Already Italian politicians are pondering election tactics.

A 5-Star source said it was considering an election alliance with the League. In March, 5-Star ran its own campaign while the League campaigned as part of a right-wing coalition with the party of former prime minister Silvio Berlusconi.

“This is not a democracy, this doesn’t respect the popular vote,” League chief Matteo Salvini said after Cottarelli accepted his appointment by the president.

Salvini characterized the move as the death throes of a political establishment intent on keeping Italy “enslaved”, and afraid of the reaction of financial markets.

“The next elections will be a plebiscite — the population and real life against old political castes and the ‘lords of the spread’,” he said.

Salvini is tapping into a belief among many Italians that EU fiscal rules are rigged against Italy, even if many voters do not want to exit the euro.

 “The euro has to stay, but we have to make our voice heard,” said Roberto D’Amelia, 68, a bar owner in central Rome.

At a Rome market, others criticized 5-Star and the League.

“I am a mother of a boy who has to travel the world and so I am convinced an anti-European minister is not the right thing for Italy,” said shopper Irene Teramo.

Cottarelli must try in the coming hours to form a government with majority support from parliament. He seems almost certain to fail, at which point the president would swear in him and his proposed cabinet, to serve until the next election.

He has been tasked with passing the 2019 budget by the end of this year, a challenge that may prove impossible without the confidence of parliament. In those circumstances, elections could be held as soon as September.

 In a televised address on Sunday (27 May), Mattarella said he had rejected Savona, the coalition’s candidate for the economy portfolio, because he had threatened to pull Italy out of the euro zone.

“The uncertainty over our position has alarmed investors and savers both in Italy and abroad,” Mattarella said, adding: “Membership of the euro is a fundamental choice. If we want to discuss it, then we should do so in a serious fashion.”

The League and 5-Star, which had spent days drawing up a coalition pact aimed at ending a two-month stalemate, responded with fury to Mattarella, accusing him of abusing his office.

The 5-Star leader, Luigi Di Maio, called on parliament to impeach the mild-mannered Mattarella.

“Last night was the darkest Italy’s democracy has ever seen,” Di Maio said. “The truth is they don’t want us to take power.”

The 31-year-old said the anti-establishment group would organise rallies across Italy, including in Rome on 2 June.

“Make some noise, it is important that we do so all together,” Di Maio said in a live address on Facebook in which he reiterated the group had never planned for Italy to quit the euro.

League chief Salvini also threatened mass protests.

“If there’s not the OK of Berlin, Paris or Brussels, a government cannot be formed in Italy. It’s madness, and I ask the Italian people to stay close to us because I want to bring democracy back to this country,” he told reporters.

However, Salvini dismissed Di Maio’s impeachment call.

“We need to keep cool. Some things cannot be done in the throes of anger ... I don’t want to talk about impeachment,” he told Radio Capital.

coronavirus

Commission approves German scheme to compensate accommodation providers in the field of child and youth education for damages suffered due to the coronavirus outbreak

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The European Commission approved, under EU state aid rules, a German scheme to compensate accommodation providers for child and youth education for the loss of revenue caused by the coronavirus outbreak. The public support will take the form of direct grants. The scheme will compensate up to 60% of the loss of revenues incurred by eligible beneficiaries in the period between the beginning of the lockdown (which started on different dates across the regional states) and 31 July 2020 when their accommodation facilities had to be closed due to the restrictive measures implemented in Germany.

When calculating the loss of revenue, any reductions in costs resulting from income generated during the lockdown and any possible financial aid granted or actually paid out by the state (and in particular granted under scheme SA.58464) or third parties to cope with the consequences of the coronavirus outbreak will be deducted. At the central government level, facilities eligible to apply will have at their disposal a budget of up to €75 million.

However, these funds are not earmarked exclusively for this scheme. In addition, regional authorities (at Länder or local level) may also make use of this scheme from the local budgets. In any event, the scheme ensures that the same eligible costs cannot be compensated twice by different administrative levels. The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union, which enables the Commission to approve state aid measures granted by member states to compensate specific companies or specific sectors for the damages caused by exceptional occurrences, such as the coronavirus outbreak.

The Commission found that the German scheme will compensate damages that are directly linked to the coronavirus outbreak. It also found that the measure is proportionate, as the envisaged compensation does not exceed what is necessary to make good the damages. The Commission therefore concluded that the scheme is in line with EU state aid rules.

More information on actions taken by the Commission to address the economic impact of the coronavirus pandemic can be found here. The non-confidential version of the decision will be made available under the case number SA.59228 in the state aid register on the Commission's competition website.

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EU

Commissioner Gabriel participates in European Researchers' Night 2020

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The 15th edition of European Researchers' Night, the largest research communication and promotion event in Europe, takes place this evening (27 November). Events will be organized in 388 cities in 29 countries, giving people the chance to discover science in a fun way. They will take place physically, virtually, or in a hybrid way, in accordance with national measures in place in response to the current pandemic.

Innovation, Research, Culture, Education and Youth Commissioner Mariya Gabriel will give opening speeches at events in Sofia, Bulgaria and Perugia, Italy. Ahead of this evening's proceedings, she said: “It is fundamental to make science and research accessible to all and to show the impact of science in citizens' daily lives. This is why the European Researchers' Night is so important: it is an event open to all, even accessible from home this year. It showcases research projects and their results in an entertaining way and is a great opportunity to discover and engage with real-life researchers and experts in their respective fields.”

European Researchers' Night is funded by Marie Skłodowska-Curie Actions and in 2020, projects focus mainly on environment, sustainability and climate change.

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Commission approves Austrian measures to support rail freight and passenger operators affected by the coronavirus outbreak

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The European Commission has approved, under EU state aid rules, two Austrian measures supporting the rail freight sector and one measure supporting the rail passenger sector in the context of the coronavirus outbreak. The two measures supporting the rail freight sector will ensure increased public support to further encourage the shift of freight traffic from road to rail, and the third measure introduces temporary relief for rail operators providing passenger services on a commercial basis.

The Commission found that the measures are beneficial for the environment and for mobility as they support rail transport, which is less polluting than road transport, while also decreasing road congestion. The Commission also found that the measures are proportionate and necessary to achieve the objective pursued, namely to support the modal shift from road to rail whilst not leading to undue competition distortions. Finally, the waiver of infrastructure access charges provided for in the second and third measures described above is in line with the recently adopted Regulation (EU) 2020/1429.

This Regulation allows and encourages member states to temporarily authorize the reduction, waiver or deferral of charges for accessing rail infrastructure below direct costs. As a result, the Commission concluded that the measures comply with EU state aid rules, in particular the 2008 Commission Guidelines on state aid for railway undertakings (the Railway Guidelines).

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The measures approved today will enable the Austrian authorities to support not only rail freight transport operators, but also commercial passenger operators in the context of the coronavirus outbreak. This will contribute to maintaining their competitiveness compared to other modes of transport, in line with the EU Green Deal objective. We continue working with all member states to ensure that national support measures can be put in place as quickly and effectively as possible, in line with EU rules.”

The full press release is available online

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