Draghi sets out his plan to save Italy – a country in the last chance saloon

Mario Draghi, the banker turned prime minister, has this week laid before the Rome parliament his ambitious plan for recovery expenditure for Italy from its current crisis – one compounded, though not entirely caused, by the Covid-19 pandemic.

The plan will cost around €235 billion – mostly from EU funds for Covid recovery. It has received outline approval from the EU Commission, despite reservations. Before taking it to his cabinet on Saturday, Draghi discussed the matter privately with the Commission President, Ursula von der Leyen.

Earlier leaks from the Commission had hinted at doubts about some of the detail, particularly in areas such as administrative and judicial reform. Italian courts are notorious for their massive backlog of cases.

Draghi has earned plaudits from home and abroad for the firmness with which he has gripped the business of government in Italy, a seeming perpetuum mobile of crises made so much worse in the time of Covid.

The summoning of the former head of the European Central Bank, and before that the Bank of Italy, has the ring of Cincinnatus being called to action against Hannibal the all-conquering Carthaginian in ancient Rome. With government, and most of sensible politics, on the point of collapse earlier this year, President Mattarella called on Draghi to form a new coalition, partly of ‘technicians’ and partly of politicians to enable Italy to spend the EU’s Covid fund properly. Mattarella was keen that messy early elections should be avoided.

So far Mario Draghi has managed Italy’s fractious politicians and to get some semblance of a coherent Covid strategy launched. This included putting a general of the Alpini corps, a specialist in logistics, in charge of vaccination distribution. So far, some progress, but there is still much to do, and hospitals and clinics are under severe strain.

Beyond Italy, Mario Draghi is credited with giving some sense to the EU’s Covid policy on vaccine distribution and export. He has enjoyed good relations with both Angela Merkel and Emmanuel Macron, and managed to establish a good understanding with Ursula von der Leyen. This was helped by his denouncing President Erdogan for making Von der Leyen stand at a ceremony while seating beside him one of her male deputies. In a flash of calculated candour Draghi called the Turkish leader a “dictator”, later telling journalists that you have to call such type by their proper description. It was a big risk given the depth and range of Italy’s dealings with Turkey – but it was, too, a clear warning shot about Turkey’s aggressive behaviour across the region, especially in Libya and Syria.

Draghi now hopes to lay the Italian plan, fully approved by parliament, before the EU commission by Friday’s deadline. By then all 27 member nations should have submitted their plans under the €750 European Covid Recovery Fund. Not all will get immediate approval – and some governments, including Italy’s, have allowed a few more weeks to iron out any details.

Draghi is credited with giving a new impetus to EU affairs – starting from Rome’s ban on an export of 250,000 vaccines to Australia – and to Italy’s international standing. Approving articles and editorials have been run by the New York Times and the Financial Times.

Not everyone in Brussels is happy. The Commission hinted that there could be holdups in the approval of the Italian recovery blueprint. Last week a full page editorial in the Charlemagne column of the Economist was headlined ‘The Draghi Delusion.’ The piece emanating from the bureau headed by Duncan Robinson compared Draghi with two previous would-be Italian reformers, Silvio Berlusconi and Matteo Renzi, who both failed to deliver in spectacular fashion.

Larded with gratuitous and spurious quotations from Machiavelli, the piece was surprisingly lacking in detail, and strangely sour in tone. The recovery plan was not discussed in any informed detail. It was being written off before it began – a tone struck by some of the behind the scenes briefings by Eurocrats in Brussels, apparently.

This would hardly be worth mentioning, but for the fact that the Economist’s ill-tempered piece has caused such a stink in Rome. It occasioned numerous phone calls to this desk from various Italian friends and diplomats to ask what I thought the Economist was up to. Having declared I am not my fellow journalists’ keeper, I asked why they were so worried.

“You don’t understand, though you should, Roberto,” one of my oldest diplomat friends said. “In Rome we take papers like the Economist and the Financial Times very seriously – perhaps more than we should. But they really can affect political and public opinion here.”

Trying to assure my interlocutor, Franco, I suggested that perhaps his colleagues’ reaction was a little esagerato, or even a touch eccessivo. Let the facts speak for themselves.

Today the facts have started speaking with the laying of the 319-page document – ‘Piano Nazionale di Ripresa e Resilienza #nextgenerationitalia’ – before parliament. It may not be the final word, as the Prime Minister himself has admitted, and may need adjustment as it rolls out over the next two years.

A chilling foreword explains how Italy has been hit more gravely by the pandemic than any other major EU economy. Prior to 2019 growth had been sluggish – well behind near competitors, France, Germany and Spain. In particular, Italy has the highest rate of unemployment of youth between the ages of 15 and 29, has been hit hard by climate change, and has fallen behind in the digital revolution. Justice and public administration are outdated and slow.

The plan is laid out under six headings: ecological transition, digitalisation, infrastructure, education and research, social inclusion and health. Local transport, air and rail infrastructure get a boost, as do over one thousand health clinic hubs and over 300 major hospitals. There is emphasis on women’s education and employment. Fast internet is aimed to be run through the country, especially to the South, the Mezzogiorno. Altogether 40 per cent of the funding is to go to the Mezzogiorno, which includes Sicily and Sardinia and the other inhabited islands – some of which are planned to be energy self-sufficient.

“He knows this is Italy in the last chance saloon,” says Marco Niada, who wrote for the Sole 24 Ore from London for more than 20 years and is the doyen of London-based Italy observers – and he has known Draghi for more than 30 years. “He is a realist and very tough, despite his charm, wit and easy conversation. He knows how politics work, having served in the Treasury as well as at the Bank of Italy.

“He knows his plan has about two years in which to succeed. And he won’t be distracted by any political ambitions – unlike Mario Monti, another former banker turned prime minister.” So popular were Monti’s dramatic turn-around reforms to save Italy from the Eurozone crisis of 2011, that he decided to run for election in 2013 as the leader of his own party. “Big mistake,” says Niada, “he only got 10 per cent of the vote. Draghi won’t follow him.

“People can get Draghi’s toughness wrong. He was educated by the Jesuits, that’s where the rigour come from, and he grew up in Rome. He has real Roman hard-headedness. He’s funny, but don’t be fooled – he’s very shrewd underneath. As a banker in the private sector he could beat the Americans at their own game. He knows so many of the top people in Europe and America.”

He is also very good at picking his personal team – and one of the stars is the young Oxford-educated economist Ferdinando Giugliano, who wrote leaders for the Financial Times and La Repubblica. Still in his thirties, he is one of the most trusted consiglieri in Draghi’s Palazzo Chigi.

Draghi himself wants his unity government recovery programme to run until the summer of 2022, when elections will be due. Many would like him to be head of state, an important symbolic role, but one which has real influence. He isn’t being drawn. Part of the problem is that parliament must choose a new President of the Republic in January at the latest. Mattarella, the quietly successful present incumbent, might be persuaded to be elected for a short second term to allow Draghi to be chosen in 2022 – but neither man has shown any willingness to go along with this.

There is something new in what the subtle and yet direct approach of Mario Draghi has brought to EU politics which is why we get the gripes of the Eurocrat old guard and their supporters in Brussels. It is a looser, more pragmatic and more flexible approach to the EU and its destiny. He does not believe that convergence – the ever-closer union – should be the driving principle, and that the EU should be a more genuine community of 27 member nations. The dirigisme of the Delors culture is not his style.

Though 73, he not only speaks to his old Euro pals like Merkel, Macron and Lagarde, but the new generation of internationals like Annalena Baerbock of the Greens in Germany, Sigrid Kaag of D 66 in the Netherlands, and Sanna Marin of Finland.

He could be one of the most transformational of modern European leaders. But neither he nor most Italians are bothered by such speculation right now. There is too much to do to get the #nextgenerationitalia recovery and resilience plan on the road.