Analysis | Draghi Has Entrenched His Influence Even If Coalition Falls


A hotter-than-usual Roman summer has produced a political conflagration. Mario Draghi has had enough of disunity in his “national unity” government and offered his resignation. It’s not been accepted, but Draghi’s impulse is correct. It is time for Italy to go to elections, and consider a future without the former European Central Bank boss as prime minister.

Draghi was brought in to head up a cross party government with a narrow remit in February 2021. He had to get Italy vaccinated and then secure 260 billion euros ($262 billion) of post-pandemic funds from the European Union. It was a vast task for a technocrat who’d never been elected to anything — even if he was famously credited for saving the euro by promising to do “whatever it takes” in 2012.

But those targets are now hit — and way behind him. His government of unity, spanning the hard right League through the populist Internet phenomenon Five Star Movement to the traditional center left, was not created to confront today’s challenges: roaring inflation, an energy crisis, war in Europe and a looming winter of discontent with a high potential for social unrest. Not surprisingly, with this backdrop, Draghi’s reform plans have been stuttering for months, forced through time after time by confidence votes. Obscure allegiances among political parties over ties to Russia are adding to instability. Draghi’s failure to gain parliamentary backing for the presidency in January laid bare rough terrain he’s navigating. His government can’t govern if it’s consumed by internal trench warfare.

In offering his resignation to President Sergio Mattarella last week, Draghi set off 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 Italian political lore that he embodies. There’s no point in Draghi torching his gravitas, both valuable to himself, to Italy and to Europe, for a government that’s not working.

It’s a view shared by people in the business community I’ve spoken to over the past weeks who are dealing with the fallout from the rising cost of refinancing of Italy’s alarming sovereign debt of about 150% of gross domestic product. Renato Mason, a business leader in the Veneto, the powerhouse region of Italian manufacturing, told me last week, before news of the latest crisis in Rome, that the political views within the coalition were too divergent to be able to provide effective leadership to confront the risks of today.

Hindsight is always 20/20 but the Draghi exit risk was always on the horizon from the minute the former ECB boss stepped in to head up a government of unity a year into the pandemic.

In the early days of his government, I spoke with a public-affairs expert who had privately advised Draghi on occasion during his ECB tenure (hence the anonymity here), who talked to me about how important it was that Italy’s application for post pandemic funds started well. Once that was in place it was far less important that Draghi stick around.

While I was skeptical about that view at the time, now it seems clear. Italy’s recovery funds and policies are now baked in until 2026. The strictures to the disbursement of funds mean Brussels (and Berlin) will maintain a tight hold on Italy: Whichever politicians head into Palazzo Chigi next will want to keep the money flowing. Crucial too, Draghi has in place functionaries through the civil service to see that they run smoothly.

And democracy in Italy is demanding to be defended. It’s high time Italians went to vote again. At the latest, it will have to be by spring next year. The Five Star Movement, the main party in the coalition, no longer exists today. Its members have immolated the movement they created by splitting into separate groups in their struggle to redefine themselves at time when the main totems of its existence — ecological transition, anti-corruption, human rights — have become mainstream.

The risk is that national elections will shepherd in a government led by far-right leader Giorgia Meloni of the opposition Brothers of Italy. Polls indicate Brothers of Italy, and the center-left will each win around 21% or 22% of the votes if national elections were called today. A right-wing government becomes most likely if Meloni teams up with Matteo Salvini’s League and Silvio Berlusconi’s Forza Italia, which are today predicted to win 15% and 9% of the vote respectively. 

But that coalition’s not a given. For one, Meloni and Salvini are openly antagonistic. Intriguingly, Meloni has also already starting softening her positions with a clear eye to power. She is more pro-Europe than the League. A June meeting held by Brothers of Italy in Milan signaled her desire to become closer to the establishment, and the money of Italy’s wealthy north, and a deliberate encroachment on League territory.

Local elections in the Veneto earlier this month showed the center-left Democratic Party led by the Francophile Enrico Letta making unheard of upsets in Salvini’s stronghold. If that translates into national polls then it cannot be ruled out that no single political group emerge victor, demanding Mattarella bless the creation of another cross-party coalition.

In that scenario, Draghi can come back to head up a new government with a stronger mandate. A political crisis in Rome may well spur the ECB into decisive action too, which would contain market fears that Italy’s gargantuan debt will destabilize the eurozone. 

In whatever case, it’s unlikely Draghi will disappear from view when the current government goes the way of all Italian governments. Apart from a second mandate in Rome, potential jobs at the International Monetary Fund, NATO or the European Commission may beckon — all with oversight of Italy in their remit.

But before then, it’s high time for Italian people to have their say.

More From This Writer and Others at Bloomberg Opinion:

• A Euro Warning Worth Heeding From Italy: Lionel Laurent

• Draghi Turmoil Is Bad News for Italy and Europe: Maria Tadeo

• Johnson Exits But Damage to the UK Will Linger: Max Hastings

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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