ROME – Mario Draghi, a European giant largely credited with saving the euro, officially presented to the Italian president on Friday a government with a broad unity, but one that ensures that at a precarious moment when the prospect of a closer European exists, Prime Minister becomes Union depends on the success of Italy.
Mr Draghi, who is expected to slightly exceed the formalities of the confidence vote in Parliament next week, will be tasked with leading Italy through a devastating and unpredictable pandemic.
But it must also secure its future by cleverly and efficiently issuing a one-off aid package that is financed from debts that were borrowed jointly for the first time by all EU countries. If he succeeds, he could set a precedent. If it fails, EU countries are less likely to re-approve such a package.
Mr. Draghi arrives in a position of rare clout in Italian politics.
As a recognized statesman in Europe, he had the opposite problem of his predecessors who sought to cobble together support for the formation of a government. Mr Draghi spent weeks finding space on his train for an ideological jumble of political parties.
Pro-Europe liberals and former communists joined extreme right-wing populists who had amazingly changed attitudes, anti-establishment forces desperate to be part of its establishment, and a free market media mogul who welcomed the return of normalcy.
“I will read the composition of the government,” said Draghi on Friday evening in a concise statement that contradicted the verbosity of his predecessor and underscored his purely business reputation and the urgency of his mandate.
On an earlier visit to the President’s Quirinal Palace, Mr Draghi spoke about the “extraordinary resources of the European Union” and the opportunity it has given Italy’s future. On Friday night, he simply read a list of cabinet members, which consisted mostly of politicians and a few key technocrats. Then he left.
Mr. Draghi’s diverse support could lead to internecine spats. However, lawmakers said the need to spend big money very quickly could also lead to major reforms in Italy’s investment-discouraging bureaucracy and glacier justice.
These stakes are high enough. However, experts, lawmakers and EU officials say the bloc’s future as a more integrated fiscal union also rests on Mr Draghi’s success in managing the hundreds of billions of euros from Brussels. You think you are in good hands.
“The fact that Draghi will lead the country at this particular moment was very, very big news here,” said Paolo Gentiloni, European Union Economic Commissioner and former Italian Prime Minister himself, in an interview from Brussels. “And very, very good news.”
Mr Gentiloni said Mr Draghi’s arrival after the collapse of the Italian government had reassured European leaders, particularly because of his reputation for handling the execution.
Others said Mr Draghi’s status as a proven senior statesman was itself critical as the union was on the verge of a possible leadership vacuum. Britain is gone, Chancellor Angela Merkel will resign and President Emmanuel Macron of France faces tough elections.
For ardent supporters of a tougher European Union and the leadership of Italy, Mr Draghi’s arrival is exactly the right time.
Apr. 12, 2021, 3:56 p.m. ET
Last year, Ms. Merkel and Mr. Macron overcame the deadlocked opposition to secure approval of a € 750 billion ($ 857 billion) economic agreement to bail out the economies of virus-hit member states. Proponents of an ever closer European Union dreaming of debt and asset sharing similar to the US saw the fund as an important step.
For the first time, countries raised money by jointly selling bonds on the open market and then distributing much of the money as grants rather than loans that did not have to be paid back to other countries in the Union. This was a critical departure from the bloc rules to keep the national debt in check.
At around 209 billion euros, Italy received the largest share of a pot comparable to a modern Marshall Plan. This time, the plan is to invest in digital competitiveness, education, green economy and large public construction projects.
But the gust of wind also caused consternation. Northern European countries are already resisting the idea that their taxpayers bear the burden of the EU The indebted European South is concerned about Rome’s ability to borrow and spend the money effectively. Now that Mr Draghi, as President of the European Central Bank, has saved the euro, he must realize the dream of an ever closer and financially more integrated Union.
“If this succeeds, it will be a pillar of European success,” said Gentiloni, who said that while the relief fund was designed as a one-off operation in an exceptional year, the union’s history has shown that it will continue to work. “It could be a precedent.”
Others have put Mr. Draghi’s role and influence on the future of Europe even more historically, referring to Alexander Hamilton in the United States.
“If it is a success it will essentially trigger a Hamilton trial,” said Nathalie Tocci, director of the Italian Institute for International Affairs and advisor to the European Union’s chief foreign affairs officer. “If it’s a failure,” she said, “it would be a nail in the coffin for those who believe in fiscal union.”
Usually an understatement, Mr Gentiloni agreed, saying that failure would “make it very, very difficult to restart this idea for a few years”.
Doubts about the ability of the previous government, led by Giuseppe Conte, to spend the money effectively, more than any other factor, led to the collapse of his government. After Mr Conte’s failed attempt to form a new coalition, President Sergio Mattarella asked Mr Draghi to put together a government.
The credibility of Mr. Draghi due to his leadership of the European Central Bank during the debt crisis, his deep professional connections to top players on the European stage and his detailed understanding of the Italian economy prepared him in a unique way for this moment.
Its gravity has proven to be an almost irresistible influence on belligerent political parties who want to play a role in spending the billions in Europe and a stake in its potential success.
Matteo Salvini, Italy’s leading nationalist who once wore “Enough Euro” t-shirts, has hosted to please his business-friendly base and gain a seat in the government of a banker who is the Italian personification of the euro.
The anti-establishment five-star movement, whose founders campaigned for the euro exit, has essentially split, with the majority supporting Mr Draghi and hoping to rename itself as a small green party. For years you called Prime Minister Silvio Berlusconi a “psycho-dwarf” but will now be in the same government as his supporters. This also applies to the center-left Democratic Party, which has been mocked by all of this for years.
Legislators expressed hope that the broad support could enable Mr Draghi to pass emergency laws to overcome administrative hurdles – and a baroque bureaucracy – that have slowed Italy down for decades. For example, there is hope among many that Mr Draghi will be able to tackle the slow pace of the Italian judiciary, as international investors often steer clear to avoid frivolous lawsuits that can freeze business for years.
“I’m sure Draghi is well equipped and experienced to remove these famous bottlenecks,” said Gentiloni, who also warned: “We shouldn’t create expectations that these can be resolved in a sudden breakthrough.”
According to the bloc’s rules, Italy has to present its plan for issuing the aid package by the end of April. Some lawmakers have feared that a delay will put Italy behind other countries and postpone entry of funds into the system until the fall.
Mr Gentiloni said he saw no reason Italy would be late and expressed his confidence in Mr Draghi’s ability to get things done. That would be important for Italy, but also for Europe.
“Not just in the short term,” he said. “But also in the long term.”