Italy government

The Italian government is in turmoil. Here’s how it got here – and what’s next

Sean Gallup

by

25.07.22 01:01

Italian officials and voters are reflecting on Prime Minister Mario Draghi’s resignation last week – and experts say it’s for good reason.

Draghi was sworn into power in February 2021. Over the past year and a half, Draghi has been hailed for his role in lifting Italy out of a health and economic crisis. Many hoped for Draghi’s guidance as Europe faces runaway inflation and Russia wages war on Ukraine.

He was credited with restoring Italy’s economy and reputation. Now experts are warning both are at stake as uncertainty grows in Italy and across Europe as a whole.

“Mario Draghi was such a reliable pair of hands across Europe,” said Christopher Way, an associate professor of government at Cornell University who specializes in European politics. “He was so respected for his skill that it’s a loss no matter who replaces him.”

Italy is expected to hold snap elections on September 25, but it will likely take several more months before a new coalition government is formed. (In 2018, it took 90 days after the legislative elections that a new government be sworn in.) Until then, Draghi has agreed to stay on as a temporary caretaker at the request of president Sergio Mattarella.

The fall of the current Italian government

Known as the National Unity Government, various parties from across the spectrum of Italian politics came together in response to the pandemic. For a time, the government enjoyed a rare period of stability, according to Way.

But that didn’t last long, with the government’s term initially set to expire in the spring of 2023. Way said party leaders began to fight for a post before next year’s elections, which is why the parliamentary wrangling began.

It all came to a head this month as Draghi tried to rally support for a key relief bill, designed to help consumers and industries cope with soaring energy costs.

The populist 5-Star movement refused to back the bill, raising concerns about how a new garbage incinerator for Rome may affect the environment. Then the League, a far-right group, and Forza Italia, a center-right party, followed suit and refused to back the prime minister.

Although Draghi is still widely favored by the president and several groups in his coalition, he offered to resign in response to the turmoil. His resignation was initially rejected but eventually accepted by the President after it became apparent that the coalition was no longer cooperating.

“The national unity majority that has supported this government since its inception no longer exists,” Draghi said. written in a statement before submitting his resignation on Thursday.

Uncertainty of Italy and the European economy

Last summer, the European Union gave Italy billions in pandemic recovery aid on the condition that the country give priority to the growth of its economy and the management of its debt.

As the former head of the European Central Bank, Draghi was tasked with managing relief funds and putting Italy’s finances in order – for the country and the rest of Europe.

This puts the European Central Bank in particular in a difficult position, Way said. As inflation climbs across Europe, the bank will need to raise interest rates quickly, but this will also increase Italy’s debt and jeopardize the sustainability of Italy’s finances.

As the third largest economy in the Eurozone, both options are likely to have ripple effects in Europe and the United States.

“Potentially destabilizing Italy’s economy and its sovereign debt market has major implications for the European Union and for the survival of the euro,” Way said.

Now, with Draghi gone, there are growing concerns about whether the next elected government will be fiscally responsible and remain committed to the economic reforms planned by the EU.

Europe’s united front against Russia’s war in Ukraine could be in jeopardy

Since Russia’s invasion of Ukraine, Europe has been able to form a strong united front against Russian leader Vladimir Putin. But that could change depending on the results of the upcoming Italian elections, said Lucia Rubinelli, an assistant professor of political science at Yale University who has studied Italian politics.

“Draghi was definitely a leading force in Europe against Russia,” Rubinelli said. “The problem with Draghi leaving is that Italy and many Italian parties have been dealing with Russia for a very long time on better and friendlier terms.”

Among the main coalition contenders are the League and Forza Italia, which have close ties with Cheese fries. If elected to the next government, Rubinelli suggests that EU strategies – including sanctions on Russia and military aid programs for Ukraine – could become more complicated.

Italy will likely continue to cooperate with EU plans against Russia, Rubinelli adds. But the larger question is what the next elected Italian government might expect from the EU in return, which could be issues such as the lifting of specific sanctions or the freedom to adopt stricter immigration policies.

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