Too much is being expected of Mario Draghi

ITALIAN POLITICS has a saviour complex. In the 16th century, Machiavelli despaired that “Italy remains without life and awaits the man…who is to heal her wounds.” In the modern era, redemption has taken peculiar forms. It once bore the appearance of Silvio Berlusconi, a cruise-ship-singer-turned-media-mogul who promised to upend politics and instead ended up repeatedly in court. A few years later came Matteo Renzi, a young reformer who over-promised, under-delivered and then imploded. Now salvation has appeared in the shape of Mario Draghi, a celebrated former president of the European Central Bank, who became prime minister in February. One Italian politician compared him to Christ.

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Where once this saviour complex was an Italian affliction, the rise of Mr Draghi has turned it into a European one. A decision by Mr Draghi’s government to block vaccine exports by AstraZeneca was applauded as a muscular approach to a company that had defied the EU. When Ursula von der Leyen, the first female president of the European Commission, was banished to a sofa during a meeting with Recep Tayyip Erdogan, Mr Draghi labelled the Turkish president a “dictator”. Buyers of Italian bonds, a pernickety focus group, have sent yields on Italian debt tumbling. Diplomats rejoice at the arrival of someone in Rome with whom they can do business. Glowing portraits of Mr Draghi appear in the international press. A new saviour had arrived, this time for all of Europe.

Great expectations of Mr Draghi are understandable. They should, however, be tempered. At the ECB, he earned the nickname “Super Mario”. But running a central bank, even one as politically fraught as the ECB, is different from running a country. The ECB always had the powers required to fight the crisis; it just needed someone with the political nous to wield them. At the ECB, one can pull a lever and money comes out. In the Italian government, one can pull a lever and find it is connected to nothing at all.

Italy does have a louder voice on the European stage thanks to Mr Draghi. But this should not require a miracle. Italy is a founding member of the club, its third-most populous country and its third-biggest economy. Prior to Mr Draghi, it was not always treated as such. Power within the EU increasingly resides in the European Council, the regular summits of European leaders. In this format, Italy’s carousel of changing prime ministers becomes a weakness. Those riding it were often underqualified. Giuseppe Conte, Mr Draghi’s predecessor, was an unknown lawyer before rising to the highest sphere of European politics. Mr Berlusconi was a tax-dodging clown with a penchant for sex parties. Compared with this, statesmanship is easy.

If Mr Draghi enjoys a higher profile on the European stage than his predecessors, it is because his fellow leaders have shrunk. After 16 years as the centre of EU politics, Angela Merkel is becoming a peripheral character as her retirement in September nears. Where Emmanuel Macron once saw the continent as his stage, domestic concerns increasingly trump European ones ahead of French elections next year. The current heads of the main European institutions, meanwhile, were chosen for convenience rather than talent. It is not hard to rule a void.

The market, too, has developed a saviour complex about Mr Draghi. Bluntly, Mr Draghi’s government can write cheques because it is he who leads it. Earlier this month, his government announced plans to add €40bn (2.4% of GDP) in stimulus, and bond yields barely budged. In contrast, when in 2018 an Italian government led by populists and the hard right proposed a budget with a total deficit of 2.4% of GDP, the markets threw a tantrum. But this privilege will not last. Mr Draghi will not be around for ever. His role is likely to be a temporary one (an election is due in the next two years). Reforming Italy is not a quick job. The litany of things that must be overhauled ranges from the courts to schools to endemic tax evasion. A comprehensive shift is impossible under Mr Draghi. All he can do is leave behind a blueprint for others. At that point, doubts about Italy will creep back into the system.

He who is highly esteemed is not easily conspired against

There is an optimistic and a pessimistic view about the Draghi effect. In the optimistic telling, a short spell in office can lead to long-term change. Mr Draghi’s government will lay out how Italy intends to spend its roughly €200bn share of the EU’s €750bn ($895bn) recovery fund. This will act as a de luxe straitjacket for future governments, who will not be able to veer from Mr Draghi’s plans without the commission stopping the cash. Mr Draghi can leave behind a new fiscal blueprint for the EU as a whole, and perhaps keep an eye on things as Italy’s president. In Germany, a new government featuring the Greens would be one dedicated to looser spending rules and deeper European integration, two long-held aims of Mr Draghi. Meanwhile, Mr Macron, who is usually up for both, will still be France’s president, at least until elections in a year. It is a fortunate alignment.

In the pessimistic view, however, Mr Draghi offers only a respite rather than a redemption. That fellow EU leaders will only truly accept a technocratic Italian prime minister is an ugly precedent. Ultimately, well over half of Italian voters support parties, whether the Northern League, the even further-right Brothers of Italy or the left-populist Five Star Movement, that both markets and European leaders view as beyond the pale. Likewise, for those European countries that are attempting to block further financial integration, Mr Draghi is a win-win. If Mr Draghi succeeds, then steady government and deeper integration are possible only under a “Super Mario” figure, who are hard to come by in Italian politics. If, however, he fails, then further integration should be avoided, since even Mr Draghi could not fix Italy. Those “chosen by God for the redemption of Italy” were often instead “cast off by fortune”, as Machiavelli wrote. Those seeking salvation today may end up just as disappointed.

This article appeared in the Europe section of the print edition under the headline “The Draghi delusion”

Roy Walsh

Roy Walsh

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