Mario Draghi Appointed as Italian PM

Can the man who saved the euro save Italy?

As everyone would expect of the former President of the ECB, Governor of the Bank of Italy and Executive Director of the World Bank, Mr. Mario Draghi is certainly not new to public speeches. Yet, this time, as he stood in the Senate chamber in Rome, he openly admitted to feeling emotional. “I’d like to tell you that, in my long professional life, there has never been a time of such intense emotion and such ample responsibility”.

After weeks of political whirlwind and some rather unexpected turns of events, from February 17th Mario Draghi is the new Prime Minister of Italy.

Let us try to shed some light on the chain of events that brought Mr. Draghi to the premiership, on the plans he has to lead Italy out of the COVID-19 and economic crises, and on how Italy’s relationship with the EU may change now that a figure of Mr. Draghi’s calibre is at the helm.

The Whirlwind That Brought Draghi to the Premiership

The past months have been nothing short of hectic for the Italian political scene.

The government led by Giuseppe Conte, already widely criticised over its management of the COVID-19 pandemic across the previous months, had been put under severe internal pressure from its own coalition. Matteo Renzi, former Prime Minister himself and leader of the liberal party Italia Viva, directly challenged Mr. Conte over his pandemic response, calling for immediate radical changes to the government’s recovery plan. Following Mr. Conte’s denial, in mid-January Mr. Renzi announced the withdrawal of two Italia Viva ministers from the government cabinet. This truly strategic and calculating political move, defined by many as Machiavellian, opened an official government crisis.

In the following days, the Conte government scrambled to reorganise its allies and ended up obtaining a vote of confidence in both Chamber of Deputies and Senate; however, the margin in the Senate was very slim, very far from an absolute majority. Days and days of consultations aimed at finding some “responsible” senators who could be willing to back the Conte government and round up the numbers in the Senate, so to provide greater legitimacy to the faltering government, proved inconclusive. On January 26th, Giuseppe Conte resigned as Prime Minister, effectively triggering the collapse of the government.

With the COVID-19 pandemic and the socioeconomic crisis requiring immediate response, it became increasingly clear that the only way out was a technocratic government of national unity.

After an unsuccessful consultation round entrusted to the President of the Chamber, on February 2nd the news broke that President Sergio Mattarella had summoned none other than Mario Draghi, former President of the ECB, Governor of the Bank of Italy and Executive Director of the World Bank.

In a few days of under-the-radar consultations, Mr. Draghi managed to secure an impressive cross-party support from all sides of the political spectrum, and, most importantly, that of almost all major parties of the country – the Democratic Party, the League and the Five Star Movement.

Mr. Draghi presented a cabinet which included representatives from all of the above political parties as well as numerous independents and technocrats. Such multilateralism gained him nationwide support, and paved the way for the newly-formed government to obtain a vote of confidence with overwhelming majorities in both Senate and Chamber of Deputies – in fact, two of the largest ever majorities in the history of the Italian Republic.

On February 17th, the Draghi government officially took office.

What Are Draghi’s Plans for Italy?

Needless to highlight, the new government is taking office in an extremely delicate moment for the country, with the COVID-19 pandemic and the socioeconomic crisis requiring an immediate and efficient response.

Thanks to the negotiations carried out by the previous government, Italy was assigned a massive €210 bn from the Next Generation EU recovery programme: it is now paramount for the new government to put them to use in the wisest and most efficient way possible.

During his inaugural speeches in front of the Chamber of Deputies and Senate, the newly-minted Prime Minister clearly outlined the strategic priorities and reform plans of his government. In particular, he highlighted four key policy areas where the new government will seek to take immediate action: the vaccination plan, a set of COVID-19 recovery reforms, the fight against socioeconomic inequality, and the education system.

1. Enhance and accelerate the vaccination plan

Mr. Draghi is adamant that the acceleration of the vaccination plan is paramount to promote the reprise of the country’s economic activity, as well as to offer all population new optimism and hope for a return to a “normal life”.

To achieve such goal, the government is ready to deploy a number of extraordinary means. First, the mobilisation of extraordinary forces to contribute to the administration of the vaccine: the ordinary and qualified medical personnel will be supported by the Civil Protection, the Armed Forces and an enlarged pool of qualified volunteers on a nationwide scale.

Additionally, vaccinations shall not be administered in specific venues only, but in all medically-equipped structures available, both public and private: hospitals, clinics, private medical centres, public administration buildings etc.

The overarching goal is the administration, once at full regime, of 300,000 vaccines a day.

Furthermore, the pandemic’s impact on the healthcare system was magnified in isolated or rural areas. This calls for a reinforcement and redesign of healthcare services at regional/territorial level. This reform aims to reorganise a strong network of basic medical services – community hospitals, walk-in practitioner offices, mental health centres etc. – so to make essential levels of healthcare assistance truly accessible to everyone, address the endemic issue of “healthcare poverty” and ease the burden imposed on the largest hospitals, which will then be able to focus on acute pathologies, large-scale emergencies and the pandemic response.

2. COVID-19 Recovery Reforms

Of course, other critical areas requiring immediate action are the deep economic and systemic crises caused by the COVID-19 pandemic. To this aim, Mr. Draghi presented plans for four main areas of reform.

2.1. Fiscal System

The government is planning an ambitious fiscal reform relying first and foremost on a revision of the income tax (IRPEF), always very much of a hot topic in Italy.

The reform would be aimed at “simplifying the levy structure”, gradually easing the fiscal burden on physical persons but seeking to preserve the progressivity of the tax.

In this regard, Mr. Draghi quipped that reforms of the fiscal system above all others should be entrusted to technical experts, people who “know exactly what happens when you raise a tax”.

2.2. Employment and Job Market

This is one of the most delicate policy issues, provided the devastating impact that the COVID-19 pandemic has had on numerous sectors of employment: jobs that cannot be carried out in distance, retail jobs that relied on in-person purchases, construction jobs and so forth, without forgetting the thousands of people who, sadly, were laid off due to the pandemic.

Mr. Draghi has pledged that government subsidies and allowances “falling from the sky” will be stopped – in a veiled dig to the much-criticised Universal Basic Income (reddito di cittadinanza) established by the previous government. He also declared that his government will issue subsidies aimed only at “creating new jobs, rather than saving old ones”.

However, it is still unclear which approach the government will privilege: if subsidies will actually be issued, and, if so, of what nature and with which timeline; if a large-scale reform of the job market may be on the table; if new guidelines may be presented for some sectors to progressively resume their activities, etc.

Most importantly, the Draghi government will have to deal with the huge question mark of what will happen when the freezing of layoffs imposed by the previous government will expire, and further thousands more people will be exposed to the risk of losing their job if the economic conditions have not been created for the economic activity of many sectors to profitably and safely resume.

2.3. Public Administration System

The government will set out an extraordinary plan for processing the massive workload accumulated by the Public Administration system during the pandemic, especially in those months when smart working was not widely adopted yet. Particular efforts will be devoted to those PA sectors that are still not efficiently digitalised, and therefore are lagging behind more than others, having accumulated an even larger unaddressed workload.

To that exact aim, Mr. Draghi announced the intention to deploy relevant government investments for enhancing the connectivity and digitalisation of the PA system. This plan will rely on the realisation of efficient and user-friendly digital platforms through which all citizens may access all kinds of public services, on the model of Northern European countries.

To reap the best results from these new platforms, the digital competences of PA servants will be upgraded by ad hoc courses, delivered both online and in-person.

2.4. Judicial System

Lastly, Mr. Draghi reminded that Italy should promptly comply with some past EU directives and communications which encouraged it to better adhere to EU efficiency and independency standards.

This will require reforms aimed at increasing the efficiency of the civil judicial system, favouring a smoother, quicker application of judicial decrees, and upscaling the fight to influence-peddling and corruption.

3. Tackling Socioeconomic Inequality

In his inaugural Senate speech, Mr. Draghi worriedly pointed out how, in the first semester of 2020, simultaneously to the first wave of the COVID pandemic, the Gini coefficient for Italy (an index measuring the degree of economic inequality in a country) has increased by more than 4 percentage points with respect to 2019. For the sake of comparison, this makes for an increase greater than the one associated with the 2008 and 2012 recessions.

The first action in tackling such a worrying increase in socioeconomic inequality, said Draghi, must be the reinforcement of the national welfare system, which, to this day, “does not sufficiently protect citizens with fixed-term contracts and self-employed workers”.

4. Reforming Education for a Better Future

The following quotes are excerpts from Mr. Draghi’s Senate speech on February 17th:

“When we do not do whatever it takes to promote in the best way possible human capital, education, school, university and culture, we let our youth down, leaving them no choice but to emigrate away from a country that too often does not know how to properly value merit”.

“We need to hope that the young Italians who will take our place, even in this very [Senate] room, will thank us for our work and have no reason to blame us for our selfishness”.

These statements clearly signal the importance that the new Prime Minister attributes to youth and education, which he addressed as key priorities of his policy platform.

Specifically, there are 3 areas of the education system where the Draghi government will take immediate action.

Firstly, a redesign of the class timetables for primary and secondary schools, with the aim of recovering the hours of in-person teaching that were lost at the beginning of 2020. In fact, when the pandemic first broke out, the means for implementing efficient online teaching were not up to speed yet. Particular attention will be devoted to the South of Italy, where long-distance teaching has encountered the most obstacles and difficulties. Furthermore, Mr. Draghi stated he is open to extending this academic year until early July – almost a month later than usual – to recover as many hours as possible.

Second is a more long-term and all-encompassing reform of the education system. According to Draghi, the government will seek to “redesign the Italian educational curriculum” in a way that must combine adhesion to European qualitative standards with particular valorisation of humanities and multilingualism. Not only will this make Italian students more competitive with their European colleagues in quantitative subjects, but it will also valorise areas of utmost relevance for Italian culture and heritage.

How Will Italy’s Relationship to the EU Change?

Expectedly so, ever since his first speech Mr. Draghi positioned his government as decisively pro-European, pro-NATO and pro-UN. However, he particularly stressed that maintenance and pride of Italian identity must not be in conflict with a sense of European belonging at all; rather, all the contrary. In front of the Senate, he stated “There is no Europe without Italy, but out of Europe there would be less of Italy” and “It is in our convinced participation to the European destiny that we must feel even more Italian”.

This strong pro-European stance clearly sets the Draghi government apart from the previous one, which was originally born (in its first term) thanks to the support of Eurosceptic parties Lega and Five Star Movement. Additionally, it sends a strong message of change of path to the Italian people, after years of progressive weakening of pro-European parties which were shadowed by the surge of Lega and Five Star Movement themselves.

We can surely expect that this resolute a standing will reflect both on domestic politics and on the Union’s internal equilibria.

Moreover, now that a figure of Mr. Draghi’s illustrious past and calibre is at the helm of the country, many expect that Italy’s relevance and standing on the European scene will change. What is certain is that Mr. Draghi possesses an intimate knowledge of the Union’s institutions and of their inner functioning, and that he is held in utmost respect and consideration by the most important figures in the Union. Whether this may give Italy a larger bargaining power at EU level, only time will tell.

Immediately after the new government took office, news broke that Mr. Draghi had already had an official call with Commission President Ursula von der Leyen. The two discussed the acceleration of the vaccination plan (an issue that Mr. Draghi believes paramount not only for Italy, but for the whole Union indeed), the need for more proportionality and solidarity between MS in the management of migration flow (a question that has become very thorny especially in the context of the COVID crisis) and the importance of Italy’s role in the Union, which is rooted into its status as one of the Founding Six.

Certainly, there is a solid professional relationship and a sincere respect already tying Prime Minister Draghi and President von der Leyen; we only need to hope that both these aspects will be maintained and enhanced during Mr. Draghi’s new endeavour.

Lastly, Mr. Draghi outlined some strategic priorities for Italy’s foreign EU policy: namely, the new government will work to reinforce some key intra-EU bilateral relationships, so to strengthen various types of ties with neighbouring States and reinforce Italy’s standing within the EU overall.

On one hand, the COVID-19 pandemic has highlighted the necessity to pursue a closer and more efficient exchange with the neighbouring countries whom the Italian economy is most closely integrated with, from a trade flows point of view – that is, France and Germany.

On the other hand, it will also be paramount to consolidate the collaboration the neighbouring Mediterranean countries, especially Spain, Greece, Cyprus and Malta, with whom Italy shares not only “the Mediterranean culture, heritage and sensibility”, but also a number of key policy issues – first of all, the management of the migration flows.

In conclusion, Mr. Draghi and his government are taking office in an extremely delicate moment of Italian history, with an economy to save, a society to recompact, and a reputation to restore. Most importantly, Mr. Draghi will have to work to make Italian people regain trust in the institutions; first and foremost those of their own country, and secondly those of the European Union, that Italy is such an essential, historical part of.

Because, as Mr. Draghi concluded at the end of his Senate speech, “Today, unit is not an option; unity is a duty”. For Italy, for Europe, and now more than ever.

Prime Minister Draghi’s speech to the Senate on February 17th can be found here.

Cover picture: Pixabay

Picture 1: "Matteo Renzi presents Italian Presidency's priorities to MEPs" by European Union 2014 - European Parliament is licensed under CC BY-NC-ND 2.0

Picture 2: "Giuseppe Conte" by Governo Italiano is licensed under CC BY-SA 3.0

Picture 3: "Ursula von der Leyen presents her vision to MEPs" by European Union 2019 – Source: EP is licensed under CC BY 2.0