In 2011 the euro was in the midst of its gravest challenge since its creation in 1999. Europe’s leaders were searching for a new president of the European Central Bank (ECB), to replace outgoing the Frenchman Jean-Claude Trichet. Their view was that the ECB’s transparent decision-making process would be unsuited to a hardliner such as the German Axel Weber. “An experienced broker of consensus [would be] better suited to the job,” the economist Carlo Bastasin would later write in Saving Europe, an account of the eurozone crisis. That figure was Mario Draghi, at the time the well-respected governor of the Bank of Italy.
A decade later, the man nicknamed “Super Mario” has once again been tapped for his consensual decision-making style. The Italian president, Sergio Mattarella, has entrusted Draghi with forming a “government of experts” after the coalition of the former prime minister Giuseppe Conte collapsed. Most parties have indicated that they are minded to support him.
If he succeeds, Draghi will take over the reins of the third-largest economy in the EU, now facing a greater crisis than even the Great Recession. He is known as “the man who saved the euro”. Can he do the same for Italy?
Draghi was born in Rome in 1947 to a well-off family. Both his parents died within months of each other when he was 15, an experience that is often said to have instilled in him an inherent cautiousness. He was a star student at the Massimiliano Massimo Institute, one of Rome’s most prestigious schools.
Although of the age to have rebelled against the established order in the wave of unrest that swept Europe in 1968, Draghi was never much of a nonconformist. “My convictions were along what you would call today ideas of liberal socialism, not really suited for extremist groups,” he recalled in a 2015 interview. “My hair was quite long, but not very long. And, that aside, I did not have parents whom I might have rebelled against.”
He went on to obtain a PhD at the Massachusetts Institute of Technology, studying in its star-studded economics faculty. His doctorate was supervised by Franco Modigliani and he was contemporaries with Paul Krugman, both of whom would go on to win Nobel Prizes in economics. His “intense and extraordinary experience” in the US would help forge his personality, “as a true European,” he would later say.
After a period flitting between working in the Italian civil service and academia, in 2006 Draghi became governor of the Bank of Italy. Much of his tenure coincided with the premiership of Silvio Berlusconi.
In 2011, when he was named head of the ECB, he inherited an institution in crisis. The European debt crisis threatened to topple the single currency and Grexit (the ugly portmanteau for Greece’s exit from the euro) was a possibility. In 2012, at the height of the eurozone crisis, Draghi would utter the words for which he is best remembered today: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro.”
The unequivocal line, the frankness of which reportedly surprised even his close advisers, reassured the markets. Borrowing costs for eurozone countries steadily dropped following the speech. One estimate put the sums saved on interest as a result of lower yields by Italy alone at more than €100bn.
Draghi’s tenure as ECB president was marked by tension with Germany, which was worried about the possible inflationary consequences of the bank’s policies. But when it came to an end in 2019, his central aim had been achieved: the euro had survived and, with it, the political project it represents.
Draghi now finds himself dragged out of quasi-retirement to form a technocratic government, a familiar move in Italian politics. The term governo tecnico is often used about the government Lamberto Dini formed in 1995, also an economist by training, and the one led by Mario Monti, as Italy struggled to recover from the 2008 financial crisis.
“There is a tradition of the political parties stepping back at a moment of crisis and putting someone in place precisely because they are not a politician,” Daniele Albertazzi, a political scientist at the University of Birmingham, told me. “The message you’re sending is basically that you can only manage the country during good times.” Such manoeuvres fuel a culture of political mistrust, he added.
The irony of a “true European” taking over a parliament elected in 2018 to form a Eurosceptic coalition government is not lost on observers. But the EU’s Covid-19 “recovery fund”, of which Italy stands to receive more than €200bn, appears to have shifted the narrative in a country in which, until recently, around 40 per cent of voters supported leaving the EU and the euro, according to some polls.
Even Matteo Salvini, the leader of Italy’s Lega Nord, has undergone somewhat of a Damascene conversion, after years spent railing against Brussels and calling for Italy to leave the euro. After talks with Draghi, he told reporters this week: “Our aim is for Italy to be a lead player in Europe again.”
Eurosceptic political parties may have shifted because the EU is seen to be delivering, with Italy benefiting more than any other single EU country from the recovery fund. Nationalist, sovereignist parties “have fewer arguments against the EU, because the EU is delivering with the recovery fund”, Ferdinando Nelli Feroci, a former Italian Permanent Representative to the EU, told me. “But whether this change of attitude is a deeply felt sentiment or a tactical move, I am not in a position to say.”
Draghi will inherit a struggling country. Italy’s economy shrunk by 8.8 per cent last year, a postwar record. Adjusted for inflation, Italians today are poorer than they were at the turn of the millennium. Restrictions related to the coronavirus pandemic have led to social unrest, especially in the less well-off south of the country, while the floundering EU-wide vaccine procurement programme looks unlikely to deliver enough doses for any European country, including Italy, for months to come.
Draghi’s government will likely last either until parliamentarians select a new president in January 2022, a contest for which Draghi is the leading candidate, or until the end of the current parliamentary term, which expires in mid-2023, Nelli Feroci said. With the German chancellor, Angela Merkel, standing down this year and the French president, Emmanuel Macron, preparing for re-election in 2022, the presence of an EU heavyweight at the head of the eurozone’s third-largest economy could shift influence towards his country in Brussels.
According to Teresa Coratella, programme manager at the Rome office of the European Council on Foreign Relations, the tasks ahead of Draghi are greater than anything any postwar Italian prime minister has faced. His success will thus depend on the cooperation of other actors. “He may be Super Mario, but if he is not supported by his Luigi, he will never manage to do what he needs.”