Vulcan Insight

Former ECB President Mario Draghi tasked with forming a new Italian government

4 February 2021

Last month Italian politics descended into crisis as Senator and former Prime Minister, Matteo Renzi, pulled his party, Italia Viva’s support from the governing coalition led by Giuseppe Conte. Renzi cited fundamental disagreements over how Italy’s allocation of more than €200 billion in EU recovery funding should be spent. He argued that the unprecedented sum of money risked being wasted on ‘hand outs’ instead of long-term investments. While Conte initially managed to maintain parliamentary support in both chambers, his attempt to build a new coalition eventually failed on Tuesday.

President Sergio Mattarella said the country could not afford the months of uncertainty that snap elections would bring as Italy faces its most severe economic contraction in modern history and more than 88,000 Covid-19 related deaths. He said he wanted a non-political government to be rapidly formed to take over from Conte to lead Italy through the pandemic. 

He has since asked former European Central Bank President, Mario Draghi, to try to form a new Italian government. Credited with playing a crucial role in saving the euro during the financial crisis as ECB President famously pledging to do “whatever it takes”, Draghi enjoys a good reputation both domestically and internationally. Mattarella urged politicians on all sides to back what he called “a government of high profile, which should not identify with any political formula.”

Draghi, a 73 year-old economist and technocrat, is not a member of any political party and so it is not yet clear which parties will end up supporting him. It is expected that any new government formation will be made up of both technocrats and politicians, though the envisaged proportions of each remain unclear. According to Renzi, “Draghi is the Italian who saved the euro, now he is going to be the pro-European who saves Italy.”

Nicola Zingaretti’s Partito Democratico, Renzi’s Italia Viva and Berlusconi’s Forza Italia have all indicated a willingness to support Draghi in theory, but the Movimento 5 Stelle, the biggest party in Parliament, are divided. Former Deputy Prime Minister and leader of the anti-migrant Lega Nord, Matteo Salvini, said he would not rule out supporting Draghi but has called for an election to take place nevertheless. Polls suggest his party would garner the most support across Italy. If Draghi’s attempt to form a coalition fails, a snap election would in all likelihood see Salvini have a much larger say in the future direction of the country.

Having identified Italy’s need “to overcome the pandemic, to complete the vaccine campaign, and to offer answers to the daily problems of the citizens” Draghi has commenced consultations with political party leaders, which will continue in the days ahead. If he manages to find broad parliamentary support, Draghi could lead the country until the next scheduled elections in 2023. If he fails to do so, President Mattarella could still make him head of a transitional and caretaker government.