Analysis-Italy’s Draghi seen facing tough year after presidential wrangling

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Analysis-Italy’s Draghi seen facing tough year after presidential wrangling
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Economy9 hours ago (Jan 30, 2022 12:40PM ET)

Analysis-Italy's Draghi seen facing tough year after presidential wrangling
© Reuters. FILE PHOTO: Italian Prime Minister Mario Draghi holds a news conference after the government met to discuss stricter coronavirus disease (covid-19) health pass rules, in Rome, Italy, November 24, 2021. REUTERS/Remo Casilli

By Gavin Jones

ROME (Reuters) – Italian Prime Minister Mario Draghi is likely to have a hard time controlling his coalition, politicians and analysts warn, after relations within and among the ruling parties worsened over this week’s election of a new head of state.

Outgoing 80-year-old President Sergio Mattarella was re-elected for a second term on Saturday, with party chiefs asking him to carry on after seven rounds of fruitless, often fraught voting in parliament to choose a successor.

With elections in the euro zone’s third largest economy little over a year away, Draghi now has to lead his bruised government through a number of difficult challenges.

He is under pressure from the parties in his broad coalition to raise borrowing to curb the impact of higher energy costs on firms and households, and the parties are at loggerheads over a contentious reform of the pension system.

Italy has also pledged to Brussels it will adopt by the end of the year around 100 measures in return for some 200 billion euros ($223 billion) of pandemic recovery funds. The success of Italy’s Recovery Plan is seen as crucial to the prospect of further EU joint borrowing in the future.

Meanwhile the coronavirus crisis shows little sign of abating, with Italy seeing hundreds of deaths every day.

Draghi had wanted the role of president himself, but his bid was opposed by two large parties in the coalition and mustered little support among rank and file lawmakers.

Financial markets are likely to welcome the continuation of the status quo as a sign of stability but the week of turmoil has left deep scars.

“Mattarella’s election belies the fact that most of Italy’s political parties are in tatters,” said Francesco Galietti, head of political risk consultancy Policy Sonar.

“We need to understand whether the key ingredient of Draghi’s government – a broad, cross-partisan majority – will still be there in a few weeks, because if not, the situation will rapidly become untenable.”

Draghi’s coalition includes the main centre-left and centre- right parties as well as the right-wing League, the once anti-establishment 5-Star movement and several smaller parties.

The presidential election saw these groups bitterly divided, with the centre-left Democratic Party (PD) largely supporting Draghi’s bid, and the League and 5-Star against it.

“Mattarella 2 – a misleading semblance of stability,” was the title of a report on Saturday by advisory group Teneo.

INTERNAL SPLITS

Precisely how the turmoil plays out for Draghi remains to be seen. Some politicians say that with the parties sidetracked by internal strife Draghi’s own role as commander of the coalition will actually be strengthened.

“I think the government comes out of all this stronger,” PD leader Enrico Letta, a strong Draghi supporter, told reporters on Saturday. “I think there will be less desire among each party to mark out its territory and dig its elbows into the others.”

This view was shared by Ettore Rosato, a leading light of the centrist Italia Viva party, who told Reuters Draghi could count on Mattarella’s ongoing support and would be pleased the ruling parties had finally all voted for the same candidate.

However, the voting also revealed numerous internal splits within the parties and with jockeying for position ahead of the election already beginning, the early signs for stability are not promising.

Many League lawmakers were unhappy with leader Matteo Salvini’s frequent changes of candidate and his final decision to back Mattarella.

The League’s Industry Minister Giancarlo Giorgetti told reporters on Saturday he was considering resigning, before backtracking later in the day.

“The League’s internal tensions will all be vented on the government,” Giorgio Mule, a junior defence minister from Forza Italia told Reuters.

On the right of the political spectrum, the unity of a conservative alliance of parties was also shattered over the presidential election, with Salvini repeatedly making plain his anger towards traditional ally Forza Italia, a partner in Draghi’s coalition.

Elsewhere, simmering tensions within the 5-Star Movement have come to a head, with Conte swapping accusations with internal rival Luigi Di Maio, who is foreign minister and a former 5-Star leader.

Veteran centrist politician Pier Ferdinando Casini, who was himself a front-runner for the role of president, said on Sunday that with political relations “lacerated” by the week of conflict there was no doubt that the government was weakened.

“I hope that the parties now redouble their support for Draghi, but seeing as I haven’t just landed from the moon, and this is the last year before elections, I’m afraid that’s not going to happen,” he told Corriere della Sera daily.

($1 = 0.8974 euros)

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