Yet the eurozone’s third-largest economy is once again sinking into political turmoil. This is bad news for Italy and Europe and a rude awakening for international investors. The great hope has faded that the Prime Minister will guarantee improved public finances and economic growth in a country that has not seen much for years.
All of this is happening at the worst possible time and under the worst possible conditions: a war is underway and we are only days away from the release of the European Central Bank of an anti-fragmentation tool that will largely benefit the country by limiting its bond spreads. This is further proof that the Italian political class is unable to see beyond the next electoral cycle.
Even in the country’s most difficult hours, Rome cannot help putting party machinations ahead of the national interest. As a result, not only has Draghi’s reputation been tarnished, but Italy risks losing its place at the Brussels table alongside Germany and France. It was his prestige – as a former ECB president who rescued the European Union amid the euro crisis – that gave Italy this new clout and sense of solid discipline. It’s all just a mirage, thanks to the myopia of local politicians.
Take Giuseppe Conte, the leader of the abstentionist Five Star Movement and the catalyst for Draghi’s decision to step down. He justifies the current government crisis by saying that Italy is facing serious economic problems and that Draghi has not listened to his claims on inequality. He is not ready to take responsibility for the fall. But you can’t be in government and work against it.
There are real ideological differences between the two men. For example, Draghi approves of sending weapons to help Ukraine, but not the Five Star base. Most recent dramas, however, claim to revive Conte’s moribund party in the polls, even if an election guarantees nothing for Five Star in terms of seats. In the meantime, the economic crisis that Conte says he wants to alleviate will be amplified by the turbulence he has created.
The next general elections are not scheduled before spring 2023, but in Italian politics, practice leaves a lot of room for improvisation. If Draghi can form another coalition, he should do so and lead the government through the winter. The prime minister doesn’t like getting his fingers dirty in day-to-day petty politics, but the extra time would avoid the unhealthy fibrillation that accompanies a whirlwind election campaign. In his former life as head of the ECB, Draghi restored confidence in the euro with three simple words: “Whatever it takes.” This time around, he could do the same for Italy by simply staying put. It’s not the end he was hoping for. In fact, that’s the mess he wanted to avoid. But no one comes out of Italian politics properly.
Staying will give him a chance to mitigate what comes next. According to recent polls, the far-right Italian Brothers party is likely to win the next election. Its leader, Giorgia Meloni, has benefited enormously from the opposition to Draghi. (It’s the only major political group that isn’t part of her coalition.) She wasted no time calling for an election. The brothers in Italy getting the most seats in the legislature would send shockwaves from Rome to Brussels. That would undo much of what Draghi has achieved since February 2021. Markets would be panicked at the thought of, once again, the dreaded Italexit.
While international commentators have been overly optimistic about a post-Draghi Italy, I’m not entirely convinced Italexit will be as imminent as it was during previous political convulsions – even if Meloni is on the rise. The subject, for the most part, has disappeared from public discourse. Only a small fringe wants it seriously; politicians who raise the issue use it as a bargaining chip to demand concessions from Brussels.
Perhaps the greatest achievement of the Draghi era has been a form of containment. In 2018, Italy was rocked by a populist earthquake that saw both the right and left fringes gain power and influence as voters pushed to transform what they saw as a government. who no longer delivered. The new powers in place promised transparency and an end to political intrigue. It did not work. Draghi was appointed (he was never elected) to put the pieces back together. His day in the sun was always going to be short. The next best hope – if and when the next election takes place – is that Italians don’t return to the travesty of the politics they voted to dismantle four years ago.
More from this writer and others on Bloomberg Opinion:
This energy crisis needs a ‘all it takes’ moment: Maria Tadeo
• The woman who could lead Italy to the far right: Rachel Sanderson
Ukraine has better heroes than this friend of fascism: Andreas Kluth
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Maria Tadeo is Bloomberg Television’s European correspondent based in Brussels where she covers European politics, economics and NATO.
More stories like this are available at bloomberg.com/opinion