The departure of ‘Super Mario’ Draghi is bad news for Italy and Europe | NOW

With the fall of the Draghi government, Italy seems to be falling into the old habit of political chaos. But the country can use it very badly at the moment. It is also bad news for Brussels, which needs all the attention it takes to curb high energy prices and curb screeching inflation. No one benefits from an unstable Italy, but the genie already seems out of the bottle.

“If Mario Draghi’s premiership is on the brink of collapse, the European Union is likely to lose the only adult left,” the European news site predicted. Politico two weeks before Draghi’s departure.

The 74-year-old prime minister was a stable factor and a beacon of calm within the often chaotic Italian politics. Italy has had no fewer than six different prime ministers in the last ten years.

Draghi built his good reputation in the banking world, first in Italy and later on the international stage. In 2011 – in the middle of the euro crisis – he was entrusted with the management of the European Central Bank (ECB). With his famous promise to save the euro “at all costs”, he managed to calm the European markets again. It heralded the beginning of the end of the euro crisis.

Political stability was expected

When he took office in February 2021, confidence in Draghi was high, both inside and outside Italy. The Italians, who nicknamed him ‘Super Mario’, believed he could guarantee stability. In Brussels, it was assumed that the former ECB president would handle the billions from the EU’s corona recovery fund wisely.

After much political haggling, Draghi was put in charge of a national unity coalition, a government in which all parties participated. Only the far-right party Fratelli d’Italia did not participate.

But in recent weeks, frustrations have piled up within the coalition that had been so laboriously brought together. The biggest pain point was a support package to compensate for high energy prices and inflation.

The populist Five Star Movement – the largest party in Draghi’s coalition – did not think the €26 billion allocated by the government was enough to protect ordinary Italians from the economic malaise.

Last week, the party broke with Draghi’s government by staying out of a vote on the package. For Draghi, that was already a reason to resign, but he was instructed by President Sergio Mattarella to look for a solution. It was not found.

Two more coalition parties abstained on Wednesday: the centre-right Forza Italia of former Prime Minister Silvio Berlusconi and the right-wing separatist Northern Italian Lega of Matteo Salvini, the current interior minister.

No one benefits from Draghi .’s departure

Draghi saw that as a breach of trust, although he survived the vote. Both at home and abroad there were calls last week for Draghi to stay on, because hardly anyone benefits from the departure of the prime minister. A stable Italian government is vital, especially now that the lives of many Italians are becoming more and more expensive.

But the political crisis is not convenient in Europe either. The war in Ukraine already brings with it enough uncertainties. For example, inflation is rising throughout Europe and it is questionable whether there will be enough gas next winter. In addition, many countries are still recovering from the economic consequences of the corona pandemic.

The reaction of the financial markets to his departure therefore did not bode well. The Italian stock market fell sharply and government bond yields rose rapidly. It may put Europe’s third-largest economy in even tougher weather.