Mario Draghi has never shirked a challenge, from salvaging the reputation of Italy’s central bank to saving the euro. He is about to take on what may be an even tougher task.
Little over a year after leaving the presidency of the Frankfurt-based European Central Bank, Draghi, 73, was asked by Italy’s head of state last week to resolve political chaos in Rome and form the country’s 67th post-war government.
Addressing Italy’s upper house Senate ahead of a mandatory confirmation vote in his new government by the Senate on Wednesday evening, Draghi promised sweeping reforms to help rebuild Italy after the coronavirus pandemic.
For the man whose illustrious career has earned him the nickname “Super Mario”, expectations could hardly be higher, with Italian financial markets rallying and the country’s broadsheets posting banner headlines on “Draghi’s Moment”.
Moving from the hushed halls of Frankfurt’s Eurotower to the mayhem of Rome’s political arena, Draghi must switch from talking interest rates with fellow central bankers to negotiating cabinet posts with rabble-rousing politicians such as Matteo Salvini, head of Italy’s hard-right League party.
If he is successful, it will round out a remarkable career and could line him up to become Italy’s next head of state in 2022.
Wolfgang Munchau, head of the EuroIntelligence think-tank, said it may be a “Mission Impossible” for Draghi to reinvent himself as a politician. “There are more ways for him to fail than to succeed,” he said.
Urbane, cosmopolitan and softly spoken, Draghi has never made a drama out of a crisis.
He was a lynchpin of the Italian Treasury in the turbulent early 1990s when Italy was forced out of the European exchange rate mechanism, devalued its lira currency and faced the risk of being unable to join the European monetary union.
This was when the media came up with the “Super Mario” tag due to his frenetic activity as Treasury director general, from organising privatisations to helping draft the Maastricht Treaty that set the ground rules of the euro project.
After leaving Italy to become vice-president of Goldman Sachs in London from 2002-5, Draghi’s reputation as a crisis manager was burnished when he was called back to Rome to revive the fortunes of Italy’s central bank, whose governor Antonio Fazio had been forced out by a corruption scandal.
At the Bank of Italy Draghi’s international standing and open, outward-looking approach were refreshing after Fazio’s parochialism and closed management style, and paved the way for his ascent to the presidency of the ECB from 2011 to 2019.
In 2012, after his famous pledge to do “whatever it takes” to save the euro at the height of the currency bloc’s sovereign debt crisis, Draghi became the darling of financial markets and one of Europe’s most recognised and powerful figures.
While on the surface Draghi’s career may seem a long triumphal march, he has plenty of critics who point to stumbles and failings along the way.
As ECB president Draghi was a signatory to a letter to the Italian government in 2011 demanding tough austerity policies that many blame for the country’s deep recession and rising debt in subsequent years.
In a similar vein, when Draghi cut off emergency liquidity to Greece’s banks during the country’s debt crisis in 2015 it was seen by some as a political move to force Athens to comply with EU demands, outside the proper role of a central bank.
“That unnecessary decision was the tipping point that made the capitulation of the Greek government inevitable,” said Francesco Saraceno, economics professor at Rome’s Luiss University, calling it “a dark episode of the European crisis”.
As Bank of Italy chief, Draghi’s performance as supervisor of Italy’s banking system was questioned during the collapse of the world’s oldest lender, Monte dei Paschi di Siena.
He approved Monte Paschi’s purchase of rival lender Antonveneta at an inflated price which contributed to its financial meltdown, and he was responsible for its oversight while the bank took out derivative contracts which undermined its accounts and led to criminal convictions.
If he becomes prime minister, Draghi will find himself trying to tackle Monte Paschi’s ongoing woes once and for all.
Even his role in Italy’s privatisation drive of the 1990s has been criticised, as some firms that were sold off either performed badly or became private monopolies, generating huge profits for their new owners.
Rome is now trying to take back control of one of these, toll road operator Autostrade per l’Italia (ASPI), following the deadly collapse in 2018 of a bridge it managed in Genoa.
“ASPI was a privatisation that didn’t go well,” said outgoing Economy Minister Roberto Gualtieri.
Main Photo: Italian Premier Mario Draghi (R) leaves after a ceremony for the opening of the 2021 judicial year at the Corte dei conti Court of Audit, in Rome, Italy, 19 February 2021. EPA-EFE/FABIO FRUSTACI