Mario Draghi’s reformist premiership nears its end

Italy has enjoyed an exceptional period of stability and success under the leadership of Mario Draghi. Installed as prime minister 11 months ago to steer his crisis-battered country to recovery, the former European Central Bank president rescued a faltering Covid-19 vaccination campaign and contained the virus with tough controls and vaccine mandates. The economy has rebounded with a hefty fiscal stimulus. And his national unity government has begun implementing a long-term programme of economic reforms and investment, backed with €190bn from the EU’s recovery fund. It is a once in a generation opportunity to raise Italy’s growth potential, albeit modestly, and to make its mountainous public debt more sustainable. Italians have seen that change is possible.

It was always naive to expect Draghi to perform miracles. Italy’s economic and social problems are deep-seated. Special interests are entrenched. Draghi, who was never going to stand in elections due in 2023, was a stop-gap solution. But the reformist Draghi premiership has proved to be disappointingly brief.

The reason is the political turbulence created by next week’s process of selecting a new president to replace Sergio Mattarella, whose seven-year term ends in early February. Mattarella has all but ruled out staying on, relaying his objections to two-term presidencies. Draghi has done nothing to dispel rumours of his interest in becoming head of state, saying in December he was “at the service of the institutions”. Draghi’s distinguished public service and ability to wield influence behind the scenes give him impeccable credentials for the job. The problem is the government might wobble or even fall without him.

A few months ago, it was a finely balanced judgment whether Italy would be better off with another year of Draghi’s hands-on leadership or seven years as presidential safeguard against the tail risk of a populist government wrecking the public finances and Italy’s place in the euro. The second year of Italy’s recovery plan could prove even more challenging than the first. It needs to meet 100 “milestones”, including difficult reforms to tax, public procurement and competition, in return for instalments of EU money. Projects need to be approved and contracts signed. It is a mammoth task. So if the government ain’t broke, why fix it?

The problem is that the hunt for a new president has unleashed political turbulence that is destabilising the government. Some of the 1,009 MPs, senators and regional representatives who will choose the next head of state by secret ballots do not want Draghi, either because they fear he will be overbearing in the role or because his move to the Palazzo Quirinale could trigger snap elections and they will lose their seats. But the lack of plausible alternatives acceptable to all sides means another choice could prove so divisive it incapacitates the unity government or brings it down altogether. The polarising candidature of former prime minister Silvio Berlusconi, who lacks the integrity for the job, is a case in point.

The worst outcome would be early elections that derail Italy’s reform and recovery plan. In these circumstances, it would be better to have Draghi in the presidency using the office’s considerable powers and moral suasion to keep the country on track. Engineering his ascendancy and a replacement premier who can keep the government together will be hard. It may require more political heavyweights joining the team. All the main parties except the far-right Brothers of Italy signed a contract with the EU when they agreed to the recovery plan. They need to take ownership of it.

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