ECB President Mario Draghi holds a news conference at the ECB headquarters in Frankfurt. Photo: Reuters/Ralph Orlowski
Italian Prime Minister Mario Draghi, shown here during his tenure as European Central Bank president in 2018, has resigned. Photo: Reuters / Ralph Orlowski

Italian Prime Minister Mario Draghi, like a master poker player, called the bluff of Five Star Movement (MS5) leader Giuseppe Conte and other political parties by handing in his resignation on Thursday and forcing President Sergio Mattarella to call early elections for September 25. 

Draghi’s second resignation in as many weeks has triggered the most precarious political and economic crisis since the country’s first democratic government of president Luigi Einaudi and PM Alcide De Gasperi in 1946. 

After rejecting Draghi’s resignation last week ahead of a confidence vote held on Wednesday, Mattarella signed a decree dissolving parliament when Conte’s MS5, the Forza Italia party of Silvio Berlusconi and the Lega (League) of Matteo Salvini withheld their votes of confidence for Draghi.

Prime Minister Mario Draghi with Italian Foreign Press Association president Esma Cakir at the Correspondents’ Dinner on July 12, 2022.

While critics and enemies like Russian President Vladimir Putin are celebrating Draghi’s resignation as a giant humiliation for “Super Mario” – the moniker he earned for saving the euro and the global financial system in 2008 – it is Draghi who is having the last laugh, as he can now run Italy and coordinate the war in Ukraine free of political interference and intrigue.

An official government source confirmed that Draghi can remain as caretaker prime minister up to the September 25 vote “and after the elections” until a new government can be formed.

A new government that will in all likelihood be headed once again by “Super Mario.”

Draghi used the first Italian Press Association (Stampa Estera) dinner on July 12, modeled loosely after the annual White House Correspondents Dinner, at Rome’s luxurious American Academy of Rome (Villa Aurelia) to demonstrate his disdain for the pointless machinations of domestic politics just some 24 hours prior to a vote of confidence on the government ‘s emergency economic aid package (Aiuti) in the Senate.

Rather than making a quick exit after his speech to nearly a hundred foreign correspondents, Draghi was more than content to sit through nearly four hours of speeches regarding the Stampa Estera’s 100-year history rather than making frantic calls to panicked party leaders.

During a mostly self-deprecating speech to the foreign press, Draghi made a pointed remark about the embarrassing photo of himself at Madrid’s Prado Museum during the critical NATO Summit at the end of June on Ukraine headed by US President Joe Biden. The photo shows Draghi on the phone with Giuseppe Conte trying to quell an internal political crisis between Conte and MS5 founder Beppe Grillo.

“Nothing has ever angered Mario Draghi more than having to take a phone call from Conte in the middle of one of the most important summits to discuss a political squabble between Conte and Grillo,” said a longtime friend of Draghi, adding: “It was not the personal humiliation per se but making Italy an object of ridicule on the international stage, something that Draghi finds unforgivable.”

Draghi made no effort to hide his deep disdain for Italian political parties, saying he was only serving “by the will of the Italian people” during his speech ahead of the Senate confidence vote on Wednesday.

Former prime minister Conte has been attempting to undermine Draghi’s government from the latter’s first day in office and has escalated from trying to block Italian arms shipments to Ukraine to derailing Draghi’s emergency economic measures meant to buffer Italy (and Europe) against economic collapse if Russia blocks all gas supplies to Europe this winter.

While prime minister from 2018-2021, Conte made no secret of preferring to do business with China and Russia over the United States, even going to the length of organizing a “From Russia with Love” mission led by Russian military biological-warfare units to help Covid-hit Italian hospitals during the height of the pandemic while failing to request emergency aid from US military bases in Aviano and Naples.

No one benefited more from the apparent fall of Draghi than Putin and Chinese President Xi Jinping.

Xi sees Draghi as an enemy for blocking Chinese investment in Italian companies and leading the anti-Chinese faction in the European Union.

Putin correctly sees Draghi as his primary foe for solidifying the pro-Ukraine alliance of the US and the EU, and advising US Treasury Secretary Janet Yellen on instituting the most damaging economic sanctions possible, kicking Russia out of the interbank SWIFT payment system.

Draghi has become the United States’ go-to man for Europe and the key coordinator of the US-EU response to the war in Ukraine, including organizing an agreement between Russia and Ukraine to get grain shipments restarted to Africa. 

Mario Draghi’s acceptance speech for the Atlantic Council’s International Leadership award with intro by US Treasury Secretary.Janet Yellen on May 11, 2022.

So far Draghi is reaping dividends from Mattarella’s call of early elections, as every Italian party is in total chaos, starting with MS5, which is in open warfare between the anti-American faction led by Conte and Grillo and the party’s pro-government members.

Other political party leaders such as Partito Democratico’s Enrico Letta, Lega boss Matteo Salvini, and Forza Italia sugar daddy Silvio Berlusconi are facing a vocal and at times violent backlash from their electorate for pushing Draghi to the point of resignation.

“Mattarella started the sorry state of affairs by allowing MS5, a fundamentally anti-democratic party, to form a government with the Lega and then the PD,” a US diplomat said. “No other Italian president has ever allowed extremist parties to form a government, from the Partito Communista of [Palmiro] Togliatti to the MSI fascist party of Giorgio Almirante.”

Grillo is a supporter of the extreme anti-Semitic, neo-fascist Casa Pound movement, named after one of history’s most noted fascists and anti-Semites, Ezra Pound.

Interestingly, it was David Thorne, the US ambassador to Rome at the time (and then-secretary of state John Kerry’s brother-in-law), who made MS5 into a political power by inviting Beppe Grillo and party head Luigi Di Maio to the US Embassy in 2013, and thus gave a US government stamp of approval to the party.

“Act like [MS5], and take in your hands reform and change,” Thorne said, angering the government of then-prime minister Mario Monti for almost unprecedented interference (at least public) in Italian internal politics by a US ambassador.

What the future holds

There is almost zero probability that a functional majority can be formed out of the current political force after the September 25 elections.

Georgia Meloni, the Marine Le Pen-inspired leader of Italy’s post-fascist party Fratelli D’Italia, is widely forecast to come out on top after the elections, making any governing coalition all but impossible.

Even while Italian political parties seemed content to see Rome burn, Draghi spent his time working on finding alternative gas supplies, making a state visit to Algeria on Monday.

During his speech to foreign correspondents, Draghi noted that Italian dependence on Russian gas has fallen to 25% from 40% of total Italian energy consumption but declined to answer this reporter’s question on where he sees that figure this winter.

The Draghi government has also triggered the largest foreign direct investment by US companies since World War II, with Stephen Schwarzman’s Blackstone private equity Goliath taking a 40% stake in Benetton’s Atlantia infrastructure concern in a $64 billion take-private deal, and Schwarzman PE rival KKR making a $60-billion-plus bid for Italy’s listed telco TIM.

Atlantia is submitting a $5 billion bid for an 82-year lease on Chicago’s Skyway toll bridge connecting Gary, Indiana, and South Chicago and at the same time expressed interest in taking over and expanding Gary/Chicago International Airport, owned by one of the most economically depressed cities in the United States.

Atlantia is the operator of Aeroporto di Roma Leonardo Da Vinci, voted the best European airport in the world by Airport Council International (ACI) and others.

Another consequence of Draghi calling Conte’s and other political leaders’ bluff is that it has busted wide open the doors to a new season of judicial investigations à la the famous 1990s Mani Puliti (Clean Hands) anti-corruption probes lead by Milan’s investigating magistrate, Antoni Di Pietro.

Interviews with current investigating magistrates (pubblici ministeri) in Milan confirmed a new willingness to take on high-level political corruption probes, especially regarding illicit financing by foreign governments of Italian political parties. The magistrates in Milan routinely work with their American counterparts at the Department of Justice and the Securities and Exchange Commission (SEC).

Copasir chief Senator Adolfo Urso on US sanctions against Intesa Sanpaolo with US Representative Darin LaHood in Washington on June 14.

One possible target is Milan-based Banca Intesa Sanpaolo, which has gained notoriety for becoming “Putin’s Bank” in Europe and for high-profile dealings with Russia’s political and economic elite, along with its €5.2 billion financing of the sale of a 19.5% stake in Rosneft to the Qatar Investment Authority in 2017.

Banking sources close to Intesa said the US Embassy in Rome made an official complaint to the bank’s chief executive officer Carlo Messina stating that the transaction could be considered a violation of US sanctions against Rosneft.

Intesa spokesman Stefano Lucchini denied that the US Embassy ever contacted Messina and that the bank has never violated US or EU sanctions on Russia. The head of the Italian parliament’s intelligence oversight committee Copasir, Senator Adolf Urso, said he would investigate whether Intesa is under any US government investigation after his speech to the American Enterprise Institute in Washington, DC, on June 14.

However, Republican congressman Darin LaHood, a member of the powerful US House of Representatives’ Ways and Means and Intelligence committees, said he is working to pass legislation to make secondary sanctions on violators as tough as the current secondary sanction regime on companies violating the US embargo on Iran.

Even as Draghi governs Italy unmolested, the pointless political crisis has undoubtably prolonged the bloody war in Ukraine wit the loss of even more innocent lives as the cabal around Putin and Xi Jinping takes credit for orchestrating Draghi’s resignation.

The overwhelming popularity of Draghi among Italians will continue to rise while Italian political parties spend the next 60 days fighting for their survival, and Draghi’s enemies will once again snatch defeat from the jaws of victory.

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.