ITALY. Rome: Former European Central Bank’s chief, Mario Draghi, has officially become Italy’s prime minister.
He swore-in on Saturday and, over the weekend, presented his cabinet ; a mix of politicians from different parties and some technocrats- this ensured him a wide political backing.
The new PM now has to face several challenges: from the current economic crisis to the COVID-19 vaccine’s rollout and the plan to spend the €200bn of the EU recovery funds.
CNN stressed how “Draghi enters the role in a position of strength. But transforming Italy’s economic prospects after years of malaise will be no easy task.”
Italian democracy deficiencies
Draghi is not the first technocratic called to solve an Italian government crisis and “keep the ship afloat”. In 2011 Mario Monti, an economist and former European Commissioner, was called to lead the country out of the financial crisis.
“Then, as now, the perception was that politics was incapable of dealing with the situation”, said Lisa Zanotti, an Associate Researcher at Diego Portales University, in an article published on the London School of Economics’ blog.
She wrote on Twitter: “My post for @LSEEuroppblog on Mario Draghi and the Italian democracy. What Mario Draghi’s invitation to form a government tells us about Italian democracy | EUROPP”.
In her article, Zanotti also analysed how Italy has always shifted between populist politics and technocratic moments, which are at odds with each other: “Italy’s history of cycling between technocracy and populism is particularly problematic because it leaves political processes with little space to manoeuvre.
“Any approach to governing that disregards the contentious nature of politics is potentially perilous for democracy, especially when it signals that a country’s democratic system struggles to cope with hard times.”
Draghi’s ambitious plan
Mario Draghi is inheriting a country in the middle of a pandemic that led to the worst economic crisis since the Second World War.
On top of that, some EU countries are concerned about Italy’s colossal public debt, estimated at 160% of gross domestic product.
In his first speech, Draghi said that he would accelerate Italy’s vaccine rollout and he unveiled his plans to reform the country’s public administration, judiciary and educational system.
He also stressed the need to work closely with the EU and “strengthen the strategic and essential relationship with France and Germany.”
Draghi biggest challenge will also be to come up with a plan on how to spend the €200bn of the EU recovery funds. To access the money, EU governments must submit their plans by the end of April, and they have to align with the guidelines set by Brussels.
Draghi’s role within the EU
Italy’s is EU’s third-largest economy, behind Germany and France, and it’s political and economic instability have always been a source of concern for Brussels.
The current pandemic and its consequences have just exacerbated the already difficult situation.
Barclays, the British multinational investment bank and financial services company, said in a statement: “The return of Mario Draghi, now Italy’s Prime Minister, had changed the political landscape dramatically.”
Italy’s main share index has raised more than 7% since last month.
CNBC reports that “Barclays analysts believe economic growth will pick up in the second half of the year too.”
According to the Financial Times’ Editorial Board, there is no person better equipped to overcome the country’s severe crisis than Mario Draghi.
He has the experience and knowledge “of the obstacles that have hindered Italian reform for decades.”
They shared on Twitter: “Europe needs Draghi’s reforms to succeed.”
The FT also stressed that Draghi is held in high regard on the “European stage” and “he may improve the EU’s handling of the pandemic and its economic fallout.”
Thus, Italy’s political and economic fate is tied to the EU’s. The FT concluded that if the country politicians don’t support the new premier and don’t follow his leadership, “Italy and the EU risk paying a heavy price.”
