Draghi was appointed to lead a cross-party government with narrow remit in February 2021. He had to get Italy vaccinated, then secure 260 billion euros ($262 billion) in post-pandemic funds from the European Union. It was a daunting task for a technocrat who had never been elected to anything – even though he was famous for saving the euro by promising to do “whatever it takes” in 2012.
But those targets have now been reached – and far behind him. His unity government, which stretches from the hard-right League to the populist Internet phenomenon of the Five Star Movement to the mainstream centre-left, was not created to deal with today’s challenges. : galloping inflation, energy crisis, war in Europe and an impending winter of discontent with a high potential for social unrest. Unsurprisingly, against this backdrop, Draghi’s reform plans had been stuttering for months, forced time and time again by votes of confidence. Dark allegiances between political parties over ties to Russia add to the instability. Draghi’s failure to win parliamentary support for the presidency in January has laid bare the rough ground he is navigating. His government cannot govern if it is consumed by internal trench warfare.
By offering his resignation to President Sergio Mattarella last week, Draghi sparked a new political crisis in Rome. Mattarella rejected the resignation, but Draghi’s frustration is understandable. There are limits to the so-called “servant of the state” model – part of the Italian political tradition it embodies. It is useless for Draghi to burn his gravity, both precious for himself, for Italy and for Europe, for a government that does not work.
It’s a view shared by people in the business community I’ve spoken to over the past few weeks who are dealing with the fallout from Italy’s alarmingly rising sovereign debt refinancing cost of around 150% of gross domestic product. Renato Mason, a business leader from Veneto, Italy’s central manufacturing region, told me last week, before news broke of the latest crisis in Rome, that political views within the coalition were too divergent to be able to provide effective leadership in dealing with today’s risks.
The pullback is still 20/20, but the risk of Draghi’s exit was still on the horizon from the minute the former ECB boss stepped in to lead a unity government a year into the pandemic.
At the start of his government, I spoke with a public affairs expert who had advised Draghi privately on occasion during his tenure at the ECB (hence the anonymity here), who told me how it was important that Italy’s request for post-pandemic funds got off to a good start. Once that was in place, it was far less important that Draghi stayed.
While I was skeptical of this view at the time, now it seems clear. Italy’s stimulus funds and policies are now baked in until 2026. Restrictions on the disbursement of funds mean that Brussels (and Berlin) will maintain a tight grip on Italy: no matter which politician goes next at the Palazzo Chigi, he will want the money to keep flowing. Crucially too, Draghi has put officials in place across the civil service to ensure that they run smoothly.
And democracy in Italy demands to be defended. It is high time for Italians to return to vote. At the latest, it will have to be in the spring of next year. The Five Star Movement, the main coalition party, no longer exists today. Its members have immolated the movement they created by dividing into distinct groups in their struggle to redefine themselves at a time when the main totems of its existence – ecological transition, anti-corruption, human rights – have become currents.
The risk is that national elections will lead to a government led by far-right leader Giorgia Meloni of the opposition Brothers of Italy. Polls indicate Brethren from Italy, and the centre-left would each win around 21% or 22% of the vote if national elections were called today. A right-wing government becomes more likely if Meloni joins forces with Matteo Salvini’s League and Silvio Berlusconi’s Forza Italia, which today are expected to win 15% and 9% of the vote respectively.
But this coalition is not acquired. On the one hand, Meloni and Salvini are openly antagonistic. Curiously, Meloni has also already started to soften his stances with a clear eye on power. It is more pro-Europe than the League. A June meeting held by the Brothers of Italy in Milan signaled its desire to be close to the establishment and the money of Italy’s wealthy north, and a deliberate encroachment on League territory.
Local elections in Veneto earlier this month showed the centre-left Democratic Party led by Francophile Enrico Letta making unprecedented upheavals in Salvini’s stronghold. If this translates to national polls, it cannot be ruled out that no political group emerges victorious, demanding that Mattarella bless the creation of another multi-party coalition.
In this scenario, Draghi can return to lead a new government with a stronger mandate. A political crisis in Rome could also prompt the ECB to take decisive action, which would contain market fears that Italy’s gargantuan debt could destabilize the eurozone.
In any case, it is unlikely that Draghi will disappear when the current government follows the path of all Italian governments. Aside from a second term in Rome, potential jobs at the International Monetary Fund, NATO or the European Commission could beckon – all with Italy’s oversight in their remit.
But until then, it’s high time the Italians had their say.
More from this writer and others on Bloomberg Opinion:
• A warning about the euro worthy of attention from Italy: Lionel Laurent
• Draghi Turmoil is bad news for Italy and Europe: Maria Tadeo
• Johnson quits but UK damage will linger: Max Hastings
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