Draghi gains vital time in reforming politics after Italy re-elects Matarella as president

In the last weeks of his seven-year term as president, Sergio Matarella has made it clear that he does not consider it appropriate to serve a second term as head of state of Italy. Nor did he want to do it.

But as lawmakers’ attempts to agree on a successor have become toxic – threatening Prime Minister Mario Draghi’s fragile national unity government – lawmakers have forced reluctant 80-year-old Matarella to stay. He was led to a landslide victory on Saturday night – the eighth round of voting in the presidential election process, which began last Monday.

“Debt to the nation must prevail over my personal choice,” the president said, visibly emotional.

Italian social media is already teeming with the president’s memes, including one in which he is tied to his chair with a thick rope. Yet for all Matarella’s personal ambivalence, his re-election has pleased Italians, especially the business community, as well as politicians and politicians across Europe.

Its extension now offers Rome a prospect of continuity and stability, leaving Draghi – considered one of Matarella’s most reliable potential successors – free to pursue the policy reforms required by the EU-funded € 200 billion reform and investment plan. Italy.

“Parliament has made the best possible decision – of course, what was most desired by so many Italian citizens and businesses,” said Corrado Pasera, CEO of Illimity bank and former infrastructure minister. “The current government will be able to carry out all the reforms and measures that Italy has committed itself to.

Mujtaba Rahman, Managing Director for Europe at Eurasia Group, a political risk consulting firm, said: “Compared to all possible alternatives, this is the best result that Europe and the markets could hope for. . . it really creates a window of six or seven months where you can do a lot. “

MEPs clap their hands after Sergio Matarella is re-elected president of Italy
Italian lawmakers re-elect incumbent Sergio Matarella as head of state in the eighth round of voting on Saturday © Gregorio Borgia / Pool / Reuters

The result will also allow Draghi to engage in critical talks across Europe on EU reforms, including changes to the Pact for Growth and Stability in the Single Market, which sets fiscal rules for the eurozone. Draghi, a former head of the European Central Bank appointed by Matarella last year amid a deep economic and health crisis, “will be a very influential voice on the table in this debate,” Rahman said.

Italy’s presidential election came at a delicate time, with Rome in the early stages of an ambitious reform plan to restart its chronically weak economy. Over the next six months, Italy will have to deal with contentious issues – including a review of its public procurement policy and competition law – in order to receive the next tranche of EU funds.

Draghi’s potential rise to the presidency has raised concerns in the Italian business community, European capitals and financial markets, with widespread concerns that a less-than-great successor as prime minister will struggle to push through reforms through a shaky coalition government. Italian lawmakers themselves feared they would be pushed into early elections if they failed to agree on a change as prime minister.

But while Matarella’s re-election prevented an immediate disintegration of the government, analysts warn that Draghi is facing significant challenges in trying to implement the next round of reforms.

The presidential election has exposed tensions in the government of national unity between the right and left blocs, especially after League leader Matteo Salvini broke up to call on right-wing parties to support his preferred candidate.

But it also revealed deep divisions in the parties as leaders, including Salvini, struggled to keep their factions together.

Italian Prime Minister Mario Draghi
Mario Draghi faces major challenges as he tries to implement the next round of reforms, including a review of competition law © Pool / Insidefoto / Matteo Minnella / Mondadori Portfolio / Getty

“The way forward will be up, not down,” said Daniele Albertazzi, a professor of politics at Britain’s University of Surrey. “I never believed that just because you’re dear, you can do whatever you want. It is in the hands of political parties. They have political power and they themselves are divided – right against left, factions against factions. All this will create chaos. “

However, others said internecine conflicts in political parties could strengthen Draghi’s hand by boosting his capacity to compromise.

His ultimate weapon, analysts say, would be threatening to resign and pull the plug on the government of national unity, which will trigger early elections if the parties refuse to cooperate.

“There is an opportunity for Draghi to further expand his control over the government and the ruling coalition and speed up reforms,” ​​said Wolfango Piccoli, co-chair of Teneo, a political risk consulting firm. “He can try to use the total chaos that seems to prevail in. . . coalition. ”

Former Italian Finance Minister Lorenzo Codonjo, founder of the London-based consulting firm LC Macro Advisors, said: “A week of intense fighting and the end result will undoubtedly lead to a clash between parties and coalitions in the coming days and weeks.

“The parties look weaker and divided.” . . which could make it easier for Draghi to find compromises on reforms, “Codonjo added. “Overall, it was a close escape from a possible political catastrophe.

But analysts say Draghi’s hand will weaken as the general election, now scheduled for 2023, approaches and parties enter full-time campaign mode, making the next few months critical.

“The prospects will be challenging from the summer,” Rahman said. “As we approach the election, the coalition will be much more cumbersome and difficult to govern. . . The window to get things done is very narrow. ”

Additional reports by Sylvia Sciorili Borelli in Milan and Davide Giglione in Rome.

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