Italy’s dilemma as Mario Draghi emerges as favorite for presidency


The prospect of Mario Draghi’s departure as Italian Prime Minister to assume the presidency threatens to plunge the country back into political instability just as the government embarks on ambitious structural reforms and a coronavirus stimulus package backed by nearly 200 billion euros in European funds.

A sign of the concern of the Italian establishment, opera fans at the La Scala theater in Milan on Tuesday evening greeted President Sergio Mattarella, who was in the audience, with chants of “bis” – or “again” – imploring him to serve another term.

Italy’s parliament is due to elect a successor to Mattarella in January as his seven-year term comes to an end. Long before the pandemic, Draghi was considered the favorite to succeed him. But the appointment of the former respected head of the European Central Bank as head of a national unity government in February made a potential transition more complicated.

Early elections would not be automatic if Draghi were to become head of state – a first in Italian history for a sitting prime minister. The parties that make up the coalition government could agree on a replacement prime minister to accompany the government until the end of the legislature in 2023. But officials and analysts say without Draghi it is unlikely that the he administration survives in its present form. .

“[Over the next year], coalition parties would inevitably bicker over spending priorities and tax cuts, which could cripple the government, ”a minister said on condition of anonymity. “The only person who can keep a cover on this is Mario Draghi.”

Mattarella called on Draghi to lead the government and organize the pandemic stimulus packages following the collapse of the previous administration led by Giuseppe Conte after Italia Viva, a junior coalition partner, withdrew its support.

In the 10 months since the former governor of the Bank of Italy took the helm, he has guided the country through the pandemic, implementing a controversial vaccination pass program. His government has also detailed a series of structural reforms that will be funded by grants and loans from the EU for pandemic recovery, ranging from strengthening digital networks and increasing energy efficiency to increase in the number of daycare centers and the acceleration of legal proceedings.

But much remains to be done. The most controversial structural measures, including the long-awaited tax, labor market and pension reforms, have yet to be implemented. Meanwhile, investments under the EU’s Next Generation stimulus fund have been described and some calls for tenders published, but analysts warn that the most complicated step – implementation – is still in the pipeline. to come.

Fitch Ratings raised Italy a notch to BBB last week, while S&P improved its outlook for the country from stable to positive in October on the basis of the government’s reform agenda.

“Draghi is the guarantor for the EU and Italian citizens that at least some of these reforms and investments will see the light of day,” said Lorenzo Codogno, a former senior Italian Treasury official and founder of London-based consultancy LC Macro Advisors.

Officials are rushing to roll out stimulus fund investments to avoid the prospect of plans being thwarted by any change of government, according to two cabinet members and senior officials.

“Once the [recovery] plan is set in motion and there are experts in every ministerial department to oversee it, it is highly unlikely that even the most Eurosceptic government will want to defeat it, ”another minister said speaking under cover. anonymity.

Recent opinion polls published by YouTrend suggest that the biggest party after the next election would be the center-left Democratic Party (PD), followed by the far-right Brothers of Italy and the League.

A potential progressive coalition, comprising the PD, the Five Star Movement and other smaller parties, or a coalition made up of the two right-wing parties with weakened center-right Forza Italia, has a chance of exceeding the required 40% threshold. to train. a government, according to YouTrend data. This increases the attractiveness of early elections for both camps.

Forza Italia officials have said Draghi is expected to stay in office until at least 2023 – in part because their leader and former Prime Minister Silvio Berlusconi himself is considering the presidency.

But observers say the League sees political advantages in a presidency held by the former ECB chief, which would lend credibility and respectability to a right-wing government. The president has limited formal powers which include the appointment of the prime minister and other members of government. But the head of state plays an important role behind the scenes to ensure stability and respect for Italy’s European and international obligations.

“[Mario Draghi] gives the assurance that [such a] majority would still suit European affairs and the international community. And, of course, on public finances and the economy, ”said a minister.

Meanwhile, PD leader Enrico Letta sees the elections as an opportunity to replace some lawmakers, many of whom were chosen by former party leader and Prime Minister Matteo Renzi, who ousted him from government in 2014.

The party also wants to be the main partner of a possible center-left coalition. Another year in a coalition government with the League could hurt their chances, PD lawmakers say.

Aside from Draghi, there are few potential presidential candidates who can enjoy the necessary two-thirds support in parliament. A center-right candidate like Berlusconi or someone on the center-left would not receive support from the other side, and insiders in Rome fear that such a choice could cause political unrest even if Draghi remained prime minister.

“The presidential election is a major obstacle, none of the options available to us are ideal,” said an Italian official.

But the official also noted that at some point Italy would have to do without Draghi as head of government. “Ultimately, the parties will have to take ownership of the European Next Generation plan, which they voted for in parliament,” the official said. “Even if Draghi remains Prime Minister, it is only for another year, not forever.”


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