As European Central Bank president from 2011 to 2019, Mario Draghi played a decisive part in saving Europe’s currency union from a near-fatal sovereign debt and banking emergency. He displayed exceptional political skills in persuading some eurozone leaders, particularly in Germany, that unorthodox central banking measures were essential to the rescue. Mr Draghi left office with a glowing worldwide reputation. But it is a different question whether his talents will suffice to pull Italy out of its present troubles.
It is an indictment of Italy’s political classes that Sergio Mattarella, the head of state, felt compelled to ask Mr Draghi on Wednesday to take over as prime minister. Giuseppe Conte’s coalition government collapsed last month because of political intrigues in Rome, skulduggery only tangentially connected to the challenges of controlling the Covid-19 pandemic and reviving the economy by means of the EU’s €750bn recovery fund.
In a severe crisis, the long-suffering Italian public deserved better from their political leaders, who refused to take responsibility for a mess of their own making. But instead of focusing on the national interest, many politicians are manoeuvring for personal and party advantage in anticipation of parliamentary elections due by 2023.
Now that he has accepted the task of clearing up the disorder left by Italy’s self-interested, squabbling parties, Mr Draghi will start with certain factors in his favour. His authority and expertise will reassure financial markets, Italy’s business community and much of the general public that a steady hand is guiding the ship.
He will seek to redesign Italy’s recovery plan in such a way as to win approval from the European Commission, which has oversight of how EU governments will spend their shares of the fund. This will be no small matter, since Italy is supposed to receive roughly €200bn, or 10 per cent of gross domestic product, in grants and loans over five years — the largest sum in absolute terms for any EU country.
However, the danger for Mr Draghi is that the premiership proves to be a poisoned chalice. Under Italy’s constitution, prime ministers are weaker than French presidents, German chancellors or UK premiers, and especially weak if they lack solid parliamentary support. As an unelected technocrat in an age of populism, and lacking a party base of his own, Mr Draghi will be vulnerable to sniping that his policies are not the expression of the popular will.
With elections on the horizon, he will risk becoming a hostage of political parties before his government has the chance to embed the economic and administrative reforms which Italy has sorely needed for decades. This fate befell Mario Monti, the former EU commissioner, who became prime minister at the height of the eurozone’s crisis in 2011, took urgent measures that stabilised the situation, but then gradually fell foul of party politics.
A Draghi-led government can be expected to introduce reforms aimed at raising productivity, improving public services, streamlining the judicial system and rooting out corruption. However, the success of such measures requires more than the leadership of one gifted technocrat, especially if he is to serve only two years in office. It requires courage and long-term commitment from elected Italian politicians across the spectrum.
Other EU governments fear precisely that Italy’s political classes lack such qualities. But if the new administration fails to make optimal use of the vast sums of EU money that should be at its disposal, the consequences for Europe, as well as Italy, will be profound.