The man widely credited with averting an earlier calamity will face the challenge posed by Europe’s sickest and most worrying major economy, which is in the throes of a recession transcending anything seen a decade ago. And whereas Draghi, in his first battle as president of the European Central Bank, could rely on the mighty powers of bond-buying and quantitative easing, he must now try to harness an unruly political system that has left one Italian prime minister after the next short of his pledges.
Draghi is only just beginning the job — he formally accepted the position Friday while unveiling his cabinet — but his arrival amounts to a test of whether a technical expert can pull off another rescue, this time as a politician. It’s also a vital moment for Italy, which has languished for years, sometimes flirted with the idea of bailing on Europe, and is now turning its trust to a consummate member of the European economic class.
“Draghi is like a deus ex machina figure,” said Charles Grant, the director of the Centre for European Reform. “But reforming the Italian [system] is very, very difficult.”
The challenges in Italy, emblematic of those across southern Europe, combine long-running aspects with emergency ones. Even before the pandemic, the economy was falling further and further behind industrial powers in Europe’s north, with youth unemployment twice that of the European Union average. The coronavirus pandemic exacerbated the gap. The tourism industry — 13 percent of Italy’s economy — collapsed. A slow vaccine rollout, coupled with a national death toll nearing 100,000, provide painful reminders that the pandemic is far from over.
But for a nation in its most peril since World War II, Draghi’s sudden emergence, after he was picked by Italy’s president to form a majority, has caused most Italians to quickly imagine a possible resilience. Draghi’s approval rating is even higher than it was two weeks ago. Parties with long-held Euroskeptic views have found grounds for rallying behind him. Draghi will enter office with a broad, left-to-right majority, and even while he works to rehabilitate Italy’s economy, he could immediately improve the country’s sway on the international stage.
Given his ties to the highest levels of American finance and a close relationship with outgoing German Chancellor Angela Merkel, some pundits have talked about Italy assuming a third spot, among Germany and France, among European decision-makers. Mujtaba Rahman, the Eurasia Group’s managing director for Europe, said on Twitter that Draghi could upend the power dynamic between Europe’s richer north and poorer south, by being an exemplary reformist, slashing red tape and transforming Italy’s sclerotic labor market.
Relative to prior Italian premiers, Rahman wrote, “Draghi is a different beast.”
Others have put Draghi’s appointment in make-or-break terms for the country.
Giulio Sapelli, an economist and acquaintance…
Go to the news source: Mario Draghi will be Italian prime minister. On the agenda: covid, an economic c…