Former Rivals Agree On Draghi To Lead Apolitical “Unity” Government In Italy

Former Rivals Agree On Draghi To Lead Apolitical “Unity” Government In Italy

It has been nearly a week since former ECB President Mario Draghi accepted Italian President Sergio Mattarella’s urgent request to form a new government of national unity after Italy’s ruling coalition collapsed in a heap of acrimony.

This followed almost two years of being led by former law professor PM Giuseppe Conte, whose rule received plaudits from international technocrats, even as his colleagues in the parliament grew increasingly irritated, finally forcing Conte to resign late last month.

Conte’s departure, and the collapse of yet another Italian government, clearly made the international neoliberal cabal anxious: should Italian lawmakers fail to agree, they worried, it could further destabilize Europe. So they hatched a plan: They would install former ECB President Mario Draghi to lead Europe’s third-largest economy (despite being the archetypal “Davos Man”, Draghi is still Italian after all) until the next scheduled election in 2023.

Offering some insight into just how terrified Italy’s political parties have become of being blamed for the crash, the FT reported Monday that both the Five Star Movement and the League, formerly two partners in a ruling coalition, are pledging their support for Draghi, even after the Five Star slammed Draghi as a member of the “establishment” (akin to being labeled as a capitalist during the cultural revolution). Meanwhile, the League (Italy’s right-wing anti-establishment and euroskeptic), has flirted with backing Draghi. League leader Matteo Salvini has said he would walk away if Five Star also backed Draghi has been an economist and a bureaucrat for his entire career, and thus has no history in electoral politics. But he still has a pretty strong reputation for his leadership of the ECB during the European debt crisis nearly a decade ago.

Five Star was founded by comedian Beppe Grillo, who – though he has been barred from running for office – retains an almost reverent appeal for many Italians. Although Salvini was the first to sign on, saying his party, the League, might be open to backing Draghi (Five Star’s leaders initially ruled it out), he might have trouble following through with his promise for political reasons, as one professor explained to the FT.

Matteo Ricci, a former deputy leader of the Democratic party, said that the shift to supporting Draghi would be easier for the Five Star Movement than for the League, which has until recently remained far more hostile to Brussels.

“Over the years the Five Star Movement made a pro-European choice, the League has never made this choice,” he said.

“Salvini’s past with Le Pen and the other European sovereigntists speaks for itself.”

Though the new unity government’s membership has yet to be decided, it’s looking increasingly likely that Draghi is on track to win here (hardly a surprise, given the circumstances, and widespread fears about suffering more economic distress) However, we wouldn’t be surprised to see markets, especially the spread between BTPs and German bunds (the 10-YRs), price in a little (or even a lot) more anxiety as all of Europe waits on tenterhooks for the decision.

Tyler Durden
Mon, 02/08/2021 – 14:21

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