by Stefania Fumo
ROME, May 17 (Xinhua) -- Plans by Italy's rightwing League party and the populist Five Star Movement to "rethink" European Union (EU) fiscal constraints and oppose international trade treaties drove Italy's borrowing costs up Thursday.
The spread between Italian government 10-year bonds and their German counterparts, which opened at 147 basis points, rose to 150 basis points in mid-morning trading. The bigger the spread, the lower investor confidence and the higher the interest rates the country has to pay to borrow money.
The League and the Five Stars emerged as the relative winners of Italy's general election in early March, and have been negotiating a government deal -- or "contract", as the two parties are dubbing it -- for the past week.
"European economic governance ... must be rethought ... including the single currency, in the name of a return to the pre-Maastricht spirit," says the latest version of the 40-page, 29-point draft document published on La Repubblica newspaper's online edition.
The so-called Maastricht Treaty of February 7, 1992, laid the basis for the euro and created EU citizenship, among other measures. It was signed by Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain and the UK.
The League-Five Star draft document also states their "intention to oppose" international trade treaties such as the EU-Canada Comprehensive Economic and Trade Agreement (CETA), the Transatlantic Trade and Investment Partnership (TTIP), and ongoing negotiations to grant China market economy status (MES).
China is the EU's biggest source of imports and its second-biggest export market, according to the European Commission.
However the League-Five Star document appears to espouse a protectionist stance. International trade deals "excessively weaken the defense of citizens' rights and damage fair competition to the detriment of domestic market sustainability," their joint draft says.
The "contract" also calls for "appropriate recourse to deficit spending" to force the economy to expand, and suggests that sovereign bonds held by the European Central Bank (ECB) should be "excluded from debt-to-GDP calculations" for all EU member states.
A previous draft dated May 14 and leaked to the press said Italy should request a 250-billion-euro debt cut from the ECB, which prompted the Milan-based stock exchange to plunge by 2.32 percent and pushed the spread to 151 basis points (from 130 points Tuesday) at Wednesday's close.
