These are unprecedented times in Europe. The EU is still engaged in unprecedented exit negotiations with the United Kingdom. Less than a year ago, the European Commission took the unprecedented step of triggering disciplinary measures against Poland, and last month the European Parliament triggered the same so-called Article 7 proceedings, this time against Hungary. Then on Tuesday, the European Commission rejected the draft budget of a member state – Italy – for the first time ever.
Though Italy’s government is unabashedly populist and euroskeptical, there’s nothing unusual about an EU country flouting EU budget rules. What’s different this time is that the bloc feels compelled to defend the sanctity of its budget rules but can’t risk forcing out Italy, its fourth-largest economy (and after Brexit, the third-largest) and a founding member. Leaving would be a last resort for Italy as well. An Italexit would be extraordinarily painful for both sides – and it could be a