42 The Economist February 20th 2021
Europe
Italy and EuropeWhatever it takes
M
arkets havea way of bowing before
Mario Draghi, who on February 13th
took charge of Italy’s 68th government in
75 years. Stocks soared the moment it was
reported he had been asked to become
prime minister. Three days after he took
office, investors flocked to a bond auction,
slashing Italy’s borrowing costs. It was
reminiscent of the hot days in July 2012
when Mr Draghi, then president of the Eu-
ropean Central Bank, vowed to do “whatev-
er it takes” to preserve the embattled euro.
The bond-buying scheme the ecbassem-
bled to render Mr Draghi’s promise credi-
ble was never used: his words were enough
to calm the financial furies.
But tackling Italy’s problems demands
more than rhetoric. Ravaged by the pan-
demic, on current projections Italy will not
regain its pre-crisis gdpuntil 2023. And its
covid-19 woes are layered atop deeper
pathologies of slow growth, low productiv-
ity and high debt that have largely defeated
the efforts of successive governments. “We
all know the reform priorities,” says Marco
Valli, an economist at UniCredit, an Italianbank. “The question is, will Draghi be able
to fast-track the badly needed ones?”
The cards may seem stacked against
him. Italy has burned through six prime
ministers in the past decade; not since
2008 have voters themselves chosen one.
The obvious cautionary tale is that of an-
other non-politician in whom Europeans
invested high hopes: Mario Monti, a for-
mer eucompetition commissioner elevat-
ed into the job in 2011 after soaring bond
yields toppled Silvio Berlusconi. He lasted
only 18 months in office, and his reforms to
pensions were later watered down.
Yet there is a bullish case for Mr Draghi.
The legacy of his bond-buying activism at
the ecb, and that of Christine Lagarde, hissuccessor, should keep markets calm as he
pursues tricky reforms. For the moment,
voters seem less restive; Mr Draghi takes
office with sky-high approval ratings. And
whereas Mr Monti faced tough calls to
slash spending, Mr Draghi’s government
will be charged with allocating Italy’s share
of the €750bn ($900bn) covid-19 recovery
plan agreed on by the eulast summer. This
could amount to more than €200bn in
grants and loans over six years.
This is essential to understanding what
amounted to a government of national
salvation unveiled by Mr Draghi on Febru-
ary 12th. Its members range from the radi-
cal left to the hard-right Northern League, a
party whose populist leader, Matteo Salvi-
ni, blithely ditched its Euroscepticism in
exchange for seats at Mr Draghi’s table.
That bears witness to the drawing power of
“Super Mario”, the man who saved the eu-
ro, but even more to the largesse coming
Italy’s way. How Mr Draghi chooses to dis-
pense it will be crucial.
He offered his first hints during an ad-
dress to Italy’s Senate on February 17th. The
new prime minister promised to tweak the
recovery plan drafted by the government of
Giuseppe Conte, his predecessor, especial-
ly the part dedicated to environmental ob-
jectives—to which 37% of the recovery
funds must be devoted. Final plans must
be submitted to the European Commission
by the end of April. Mr Draghi said his gov-
ernment would pay close attention to
whether Italy’s proposed investment pro-BERLIN AND ROME
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