European Central Bank president Mario Draghi speaks with European lawmakers in Brussels, September 23, 2019 (European Parliament/Dominique Hommel)
Mario Draghi is on his way out.
The former European Central Bank chief, prime minister of Italy for eighteen months, failed on Thursday to keep his coalition together. The populist-left Five Star Movement and right-wing League and Forza Italia boycotted a confidence vote in parliament.
Draghi’s resignation could trigger an early election in the autumn, which would push passage of the 2023 budget, including measures to help businesses and families cope with inflation, to next year.
It also puts a six-year, €221-billion investment and reform program at risk that’s funded by the EU. (I analyzed the plan here.) Right-wing opponents are polling in first place. (more…)
European Central Bank president Mario Draghi walks to a news conference in Frankfurt, October 25, 2018 (ECB/Martin Lamberts)
Mario Draghi is the best thing to have happened to Italy in many years — and a symptom of its political weakness.
The former European Central Bank chief, who became prime minister a year ago, has the stature to implement difficult but long-overdue reforms in everything from digitalization to labor law. He has the support of all political parties except the far right. They can hide behind Draghi, and Draghi’s authority, when the reforms inevitably hurt vested interests.
If Draghi steps down, the whole thing could collapse. Left, right and anti-establishment parties could once again fall out. A next government could cancel or reverse reforms that affect its voters, which in turn would undermine support for countervailing reforms.
But if Draghi stays as prime minister until the election in 2023, parties need to find someone else to fill Italy’s largely ceremonial presidency, which has a seven-year mandate.
The eighty year-old Sergio Mattarella is due to step down in February. His successor must be chosen by a conclave of 321 senators, 630 deputies and 58 regional delegates.
You would think with so many politicians (Italy has the third-largest parliament in the world after China and the UK), it shouldn’t be too hard to find a replacement. But all eyes are on Draghi again. (more…)
European Central Bank president Mario Draghi makes a speech in the European Parliament in Strasbourg, January 15, 2019 (European Parliament/Daina Le Lardic)
Two months ago, I argued Mario Draghi understands what Italy needs. Here it is.
The former European central bank chief, prime minister since February, has unveiled €221 billion in proposed investments, spread over six years. €191 billion would come from the EU’s coronavirus recovery fund.
European Central Bank president Mario Draghi speaks with European lawmakers in Brussels, September 23, 2019 (European Parliament/Dominique Hommel)
Mario Draghi is off to a good start. The former central banker has won the support of Italy’s major political parties to form a government and he understands the reforms it needs to undertake.
His challenge will be convincing the parties to see those reforms through.
Receiving more than €200 billion from the EU’s €750 billion coronavirus recovery fund should help. A chunk of the money will go to vaccinating Italy’s population of 60 million, but there will be more than enough left over to invest in long-term growth.
Money isn’t everything, though. Bringing Italy’s economy back to life after it shrunk almost 9 percent in 2020 will require making the sort of choices its politicians have avoided for years. (more…)
European Central Bank president Mario Draghi walks to a news conference in Frankfurt, October 25, 2018 (ECB/Martin Lamberts)
It’s not an endorsement of Italian democracy that the country needs another above-the-fray technocrat to pull it out of the mud.
If Mario Draghi, the former European Central Bank chief, wins the support of parliament, three of the last six Italian prime ministers will have been apolitical appointees.
I hope Ferdinando Giugliano is right and Draghi will succeed where his predecessors failed, but recent history — and Giugliano points this out too — does not inspire confidence. Neither Mario Monti nor Giuseppe Conte was able break the political logjam to enact much-needed reforms. (more…)
The oscillations of the European debt crises have become quite familiar to those observing it. A country or national bank suffers from a negative spiral of debt and fading confidence. This is followed by a new nudge in the direction of deeper integration, or a bailout package is announced. A northern country which is fiscally sound then makes a controversial statement of refusing to cooperate on the terms proposed. This process muddles on until a new country or institution is in a dire situation. Like last year, summer holiday season generates the greatest divide between the political process and the factors that affect the crisis.
Quite apart from this has been the European Central Bank. For this reason, Mario Draghi, its president, recently caused a stir that reverberated far from the usual central bank watchers. (more…)
