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