Italian Prime Minister-designate Mario Draghi now has the herculean task of saving Italy from the abyss but also gluing back the fractured relations between the United States and erstwhile NATO allies Italy, the UK, Germany and France.
Named Super Mario for singlehandedly saving Europe from collapse during the 2008 financial crisis as chairman of the G20 Financial Stability Board, Draghi now faces the daunting task of taking Italy out of a near-fatal nosedive created by the utterly incompetent coalition government of Giuseppe Conte with the anti-democratic M5S movement of Beppe Grillo.
The failure of Italian President Sergio Mattarella to name him immediately as prime minister of a unity government almost a year ago means Draghi now inherits a country with the highest Covid-19 mortality rate per capita and the lowest gross domestic product in the developed world.
Italian debt, already the highest per capita in the Western world, has spiraled even more out of control under Conte-M5S so that the survival of the euro currency is now a legitimate concern.
While Conte acted as a modern-day Nero, Draghi has been working in the shadows leading a combined US-EU approach to inject massive liquidity into major economies under the call of “whatever it takes” through close cooperation of European Central Bank (ECB) president (and former International Monetary Fund head) Christine Lagarde, US Federal Reserve chairman Jerome Powell and then-US treasury secretary Steven Mnuchin.
It will now fall to Draghi not only to pull Italy out of its kamikaze nosedive but also to become the key man in setting down a common Group of Seven economic and monetary policy with US President Joe Biden, US Treasury Secretary (and former Fed chairwoman) Janet Yellen, the European Union and Japan.
Draghi has already raised the alarm of “bad debt” and the risk of cascading bankruptcies if developed nations waste stimulus funds and fail to reinvest them in longer-term assets such as infrastructure or working capital aimed to promote economic growth.
Former US treasury secretary Larry Summers has followed Draghi’s warning by issuing an op-ed warning to President Biden that his recently approved US$1.9 trillion stimulus package may do more harm than good.
Draghi is undoubtedly the most qualified and competent leader of the G7 in decades. Holder of a PhD in economics from the Massachusetts Institute of Technology (MIT), he oversaw the largest privatization in European history as director general of the Italian Treasury Ministry and eased Italy into the euro as Bank of Italy governor.
He then was an extremely successful dealmaker during his stint as a Goldman Sachs International vice-chairman before becoming “Super Mario” at the ECB.
“Draghi has excelled in every position he has ever held. He has always worked with integrity and a moral compass since studying with the Jesuits after being orphaned at a young age,” said Lorenzo Toglia, a lawyer who worked for Draghi at the Italian Treasury.
Like all the best of the best of Italy, Draghi is profoundly pro-American, and the trans-Atlantic alliance is core to his worldview.
US-EU-NATO relations, already severely strained after the disastrous foreign adventurism of Hillary Clinton in Libya and Syria, were almost completely fractured by president Donald Trump’s big-stick “America First” diplomacy with European allies.
Draghi is also set to become the United States’ greatest ally in ending US military operations in Afghanistan and Iraq while becoming the honest broker with Russia and the horse whisperer for a militarily belligerent China.
“Unlike every other politician, everyone respects and listen to Draghi,” a US Treasury official said. “Draghi knows how to talk to [Russian President Vladimir] Putin and knows the true state of China’s leveraged economy. People know that Draghi speaks quietly and carries a big stick.”
Italians like Café Milano owner Franco Nuschese in Washington, DC, already act as Italian envoys. Nuschese, a native of Minori on the Amalfi coast, was instrumental in bringing about the historic Abraham Accords between the United Arab Emirates and Israel by using his restaurant to set up an informal meeting between Israeli Prime Minister Benjamin Netanyahu and the UAE ambassador to the US, Yousef Al Otaiba.
Draghi also knows how to harness the dynamism of the Italian private sector effectively, not only to bring about economic growth, but also to build a bridge to the world’s largest economy.
In fact, Italy’s greatest crisis is structural unemployment that was already unsustainable pre-Covid with up 60% of young Italians not working and in a country where only one-third of the citizens are gainfully employed.
The Aeroporti di Roma (ADR) operated by the Benetton family has already led by example by reopening US-European flights through Covid-19-free Alitalia and Delta Airlines flights where passengers only need to take a Covid-19 test before and after arrival to avoid mandatory quarantines.
The Benettons, who have created one of the largest infrastructure companies in Europe, Atlantia SpA, say they are willing to invest billions in US airports and highways if President Biden enacts a bill enabling such foreign investment, Atlantia chief executive officer Carlo Bertazzo told Capitol Intelligence.
Mario Draghi is an heir apparent to Italy’s first Italian president and liberal icon, Luigi Einaudi. Einaudi, who also served as a governor of the Bank of Italy, played a critical role in bringing Italy back from the dead after World War II thanks to the US Marshall Plan, making Italy the world’s fifth-wealthiest economy in the world.
The world can be cautiously optimistic that Super Mario will repeat history and do the same for Italy and the world.
Peter K Semler is the chief executive editor and founder of Capitol Intelligence. Previously, he was the Washington, DC, bureau chief for Mergermarket (Dealreporter/Debtwire) of the Financial Times and headed political and economic coverage of the US House of Representatives and Senate.