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Italy Is Starting to Price In Two More Years of Mario Draghi

Mario Draghi has cemented his position in Italy and his political allies are beginning to believe he will remain in power until his term ends in 2023.


The 73-year-old former president of the European Central Bank took the reins four months ago and in that time oversaw the roll-out of a vaccination program and received approval from the European Commission for his plan to spend 191.5 billion euros ($228). billion) recovery fund.


With economic growth exceeding government forecasts, none of the three main groups backing Draghi’s technical administration could see any benefit in trying to push him aside quickly, officials said, Asked not to discuss private conversations. With no party of his own, he is also assured that he will not go to the next election. A spokesman for Draghi declined to comment.


When Draghi was brought to power after Giuseppe Conte’s administration fell into the depths of the pandemic, some insiders questioned whether his government would survive an immediate emergency.


Officials said part of his secret is keeping a very tight grip on key decisions, which has allowed him to strike a delicate balance between the competing interests of his coalition partners. This has given Draghi room to implement policies that will bear fruit in the long term and increase the life expectancy of his administration.

After Italian 10-year bond yields hit a 10-month high in May as global reflation trade hit a fever pitch, they are now barely higher than the levels seen at the start of Draghi’s top. This is partly thanks to continued support for the economy pledged by the ECB and confidence in Draghi’s government.


Machiavellian politics


Officials now expect him to remain in office after President Sergio Mattarella stepped down in February next year. It is a task that the Italian media regularly speculates that Draghi may be in for the taking.


This is certainly an important date for Italian politics. But at the same time, there is a way some politicians thought they could get rid of Draghi: by pushing him upwards. Party officials say that, in fact, making Draghi head of state was an option he was considered to succeed him as prime minister.


This is an important job. But it is also a poisonous cup. While largely ceremonial, the president comes into his own in times of instability by deciding (which happens a lot in Italy) to form the government. He (or she) is the ultimate guarantor of democracy in a country that has lived through a dictatorship.


So whoever replaces 79-year-old Mattarella will have a role to play in deciding what happens next for the EU’s third-largest economy and who will become head. Now that Draghi has got the immediate economic and healthcare crisis under control, he is turning his attention to other problems. Officials said when he considers ways to reform public administration, justice and the tax system, he realizes it will take time to fix it.


He has also taken measures to increase his personal powers, suggesting his intention to remain so for some time now. Draghi is creating a new cyber security unit that will report to the prime minister’s office, he is centralizing control over Italy’s security against foreign takeovers, he has appointed a new chief of the Italian secret services and a long-term ally is heading to the top. kept on.


Italy’s dirty politics have also created incentives that help Draghi.


Any attempt to start mid-term elections would need the support of a majority of lawmakers to be successful. Last year’s constitutional reform, which cut the number of lawmakers in the next parliament, means deputies face a higher than usual risk of losing their seats – and the privileges that go with them.


Many benefit from the status quo. Matteo Salvini’s league needed time to consolidate a centre-right alliance with Silvio Berlusconi’s Forza Italia, which would increase its chances of winning the next election. Berlusconi, who dominated Italian politics for two decades, said on Sunday it was time to seal it until the 2023 vote.


The League and the Democratic Party, both on the centre-left, are calculating they will benefit as the recovery picks up and will take the momentum out of Italy’s populist Brothers. Opinion polls show that the three groups have about 20% support.


The Five Star Movement, the biggest force in the current parliament, is least likely to cause trouble as it threatens its destruction when the electorate is tested. Its support has collapsed since the 2018 election.


There are two events on the horizon that could upset Draghi’s equilibrium. The fallout is the first local election since being postponed last year because of the pandemic. A better-than-expected result for the centre-right could prompt Salvini and the league to think about how they can hold a general election.


A bigger test than this is likely to be the transition to the presidency in 2022. A two-thirds majority is required for the appointment of a president – ​​which is one reason why Draghi has been touted as a candidate who will garner widespread support.


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