Just over a decade ago, Mario Draghi, then president of the European Central Bank, saved the European Union from collapse in the aftermath of the financial crisis. His commitment to “do whatever it takes” to save the euro has become a battle cry for any business or political leader seeking to complete a Herculean task.
Today, Draghi is Italy’s prime minister with the support of most of the country’s political parties. However, the challenges facing him are not just about putting some life back into the Italian economy. It is more about rescuing the EU from decades of economic stagnation and social decline.
Draghi has, at most, just two years to make a difference in Italy’s and, indeed, the EU’s, economic prospects. In two years, Italy will hold new elections and will see the probable return of politicians to lead the country.
Italy has the third largest economy in Europe and one of the weakest.
It has often followed the tendency to deflect power to technocrats when things go wrong and when politicians are found to be incapable of dealing with the situation.
Italy and the EU could not have identified a better person to heal ‘the sick man of Europe’.
The new leader of Italy has the right temperament, experience and knowledge of Italy, and even the EU, to help his country and the Union get back on the fast track of economic growth.
In his first speech to the Italian parliament as head of government, Draghi outlined the areas that he will be addressing to, finally, make a start on the long road to implementing the reforms that his country needs.
Improvements to the public administration, the judiciary and also the education system as well as the digitalisation of the economy, business innovation and renewable energy are the more critical areas of reform.
This is indeed a tall order not just for Italy but for many other Mediterranean EU member states.
Dealing with the pandemic is the most immediate challenge. Italy has been one of the worst-hit European countries due to poor management of the crisis. Draghi needs to find a quick solution to accelerate vaccinations, failing which a resurgence of Italian Euroscepticism would be almost inevitable.
The European Commission’s handling of the vaccination programme has been close to shambolic. Draghi will, hopefully, inspire some effective management practices in the EU’s governance structures.
Some may think that Draghi’s task is easier this time around. He does not have to implement an austerity programme to save his country. There is almost universal consensus that, this time, what politicians and regulators need to do is the opposite: loosen the purse strings and pour money into the economy to dampen the social and economic fires that are burning in the Union. But this is where Draghi’s and other current EU politicians’ task becomes critically difficult.
The EU has voted €750 billion for a recovery war chest to invest in the different member states and help them restructure and revitalise their economies after the pandemic is over. Italian politicians have been squabbling endlessly on how this money should be spent. Some might disagree with Draghi’s priorities and want to channel more funds into their preferred political projects.
Spending this money judiciously to revive Italy’s and the EU’s socio-economic prospects will be the acid test for Draghi’s short term as prime minister and rescuer of the EU.
He deserves the support of all EU politicians in order to make it a success.