Draghi sworn in as PM – can he save Italy?
The new Italian cabinet of the former central banker Mario Draghi – Italy’s 70th since 1945 – was sworn in at the Quirinale Palace in Rome last Saturday. It is an exotic mix of career politicians and ‘tecnici’ – professional economists and jurists. From right to left nearly all political parties had decided to back the new prime minister’s programme. The exception is the outright nativist ‘Fratelli d’ Italia’ (Brothers of Italy) which operates to the right of Matteo Salvini’s League – mainly by being exceptional, and exceptionally nativist.
Now comes the tough part for Draghi – the dispatch of his ten point government programme for approval in Brussels, and its immediate implementation at home. This week he will unveil the programme to parliament – fully expecting to get a vote of confidence from both houses by the end of the week.
Brussels has set some tight timelines for the expenditure and investment of Italy’s €209 billion of Covid recovery funding, with tough oversight. The fear that the EU would require an austerity programme, similar to the one it imposed on Greece, brought down the Italian coalition led by Giuseppe Conte.
Then there are the usual and unusual ups and downs of Italian domestic politics. Even before the government plan has been announced, including a comprehensive road map for navigating the pandemic, two representatives of the League have denounced the decision this week not open ski lifts at major resorts. This is despite the League now being part of the new government.
Draghi’s plan has three main thrusts – the need to get a full, comprehensive national programme for the pandemic, an emphasis on social cohesion and development investment. All with a firm environmental and ecological bias. The Covid pandemic has challenged the capacities of most Italian hospitals. It has exposed the fact that there is no coherent health service throughout the country. The system of regional governments – at first seen as a bonus at the beginning of the Covid epidemic a year ago – is fractured and incoherent. Too many local authorities and health care boards – or ‘enti’ – have been doing their own thing, which at times has amounted to little of value. Lockdowns have varied from place to place.
Italy has recorded 95,000 deaths from Covid-19, the fourth highest rate in the world of deaths per head of population. The vaccination programme has had nothing like the roll-out and take-up experienced by Britain.
Plans for reviving the Italian economy also face huge obstacles. GDP has fallen by nearly 9 per cent over the past year, almost comparable to that of the UK. Already it was one of the worst performing large economies in Europe – with little real growth since the turn of the century. In the background there is the huge public debt, now running at just under 160 per cent of GDP.
Mario Draghi has put some highly respected figures in several of the key posts in the new cabinet, most notably Daniele Franco, who moves from being Director General at the Bank of Italy, where he and Draghi were colleagues, to become Minister of Economy and Finance. He has also appointed Vittorio Colao, former CEO of Vodafone, to a revamped ministry for Technological Innovation and Digital Transition.
A third powerful non-party man, Patrizio Bianchi, who once worked at the UK Price Commission and is an expert on the digital economy, has been appointed minister of Education and Public Instruction. This week he will have the horny decision whether to extend the school year – a drastic remedy for the huge losses of lessons and lectures in schools and colleges.
The top three ‘tecnici’ are rated highly by the business and academic worlds in Italy, but my friend Franco, a highly experienced public servant, is worried. “In previous governments of ‘tecnici’ the economists have been brought in to cure debt and impose budgetary discipline. Now they are being asked to spend the money from the EU, and quickly. This is something they are unused to doing.”
On top of all this there is the peculiar choreography of Italian politics and elections over the next year, a set of dance moves that makes the deadly tarantella of Naples and the South look like a picnic.
Next June the introduction of the new constitutional reform, approved by referendum last year, means that parliament will go down from the current 945 seats for the two houses to 600. Powers of the Senate to introduce and block legislation are to be curtailed. It is also to have only 200 members to the current 315, and the lower house, the Chamber, goes down from 630 to 400 seats.
This means that many of the present Deputies and Senators cannot expect to be re-elected. Parties that cannot make it above a threshold of over 3 per cent of the national vote are disqualified. There is now a growing sense that the current parliament and its members lose their legitimacy after June. From July, much of the political process becomes frozen in a six month pause running up to the election of a new head of state by the two houses next February. In the ‘blank semester’, as it’s known, governments cannot be voted out, and elections cannot be held.
Tutto sommato (all things considered) as Italians might remark wearily, Mario Draghi’s programme for national and social revival has about six months to prove itself. We will know by September if is working. In the meantime the administration has to cope with some important dates in the international calendar – from the G7 summit hosted by Britain in June, to the G20 with Italy as host at the end of October, to be followed sharply by the COP-26 climate change summit Italy co-chairs with Britain beginning a week later.
To arrange the summits, Italy has been reaching out to Britain – and there is even talk of an Anglo-Italian friendship and cooperation treaty. Yet this is contradicted by the part of Draghi’s ten point programme devoted to foreign policy. In it he declares that Italy intends to adhere to the transatlantic alliance envisioned by Joe Biden. This is to be complemented by closer adherence to “Europeismo.” This is code for the European project, or “completion of the policy of economic and monetary integration,” to quote today’s Corriere della Sera of Milan.
This could mean trouble for relations with Britain, and for Italy’s aerospace industry. Italy is heavily committed through the Anglo-Italian Leonardo company to the British next generation combat air system, based on the Tempest manned and unmanned aircraft project. Italy has already committed some €2 billion to the project, and through Leonardo in the UK, has done pioneering work on software, communications and controls, incorporated in the latest version of the Typhoon II combat aircraft.
France is leading a similar Future Combat Air System project, or SCAF, for Europe, in partnership with Germany and Spain. Yet most of the work has been awarded by Paris to French companies, such as Dassault, Thales and Safran. They don’t want the Italians in. Equally, France has just pushed Italy out of a joint European maritime construction partnership – and the Navaris joint venture between Fincantieri of Italy and France’s Naval Group is all but moribund in the eyes of leading Italian analysts.
One of the important indicators of success or failure for the Draghi national rescue strategy is the upcoming election of a new head of state next February. Since the job of President of Italy is largely ceremonial, perhaps it shouldn’t have the significance it now very certainly has. It has been suggested that when the parliament chooses a new president, the only candidate should be Mario Draghi himself. He might hand over the reins of government as prime minister, so some think, to become Italy’s top referee as President of the Republic.
On the other hand, the present incumbent, the surprisingly successful and level-headed Sergio Mattarella, may agree to be re-elected for a short interim presidency of about 18 months. This would allow Draghi to complete his reforms, and arrange a general election late next summer. There has to be an election by spring 2022 as the five-year term of the present parliament expires. But Italian parliaments rarely run the full five-year course for fear of becoming an endless electoral dog fight as the clock runs down in the final year.
“The trouble with this,” says my friend Franco, is that like President Mattarella – a shrewd and cultured Sicilian – “Mario Draghi hasn’t said he actually wants to be President of Italy. Mattarella has said he doesn’t want a second term. And he won’t play games and take a second term just for a few months. He is just not like that.”
So both Draghi and Mattarella could be out of the running altogether. However sensible and reasonable Mario Draghi’s government line up and programme may appear, Italy’s politics have as much potential for Stromboli fireworks as ever.