by Thomas Fazi
Monday, 26
April 2021

Mario Draghi: don’t believe the media hype

The Italian PM's EU 'revolution' is a fantasy
by Thomas Fazi
Draghi is just another Emmanuel Macron Credit: Getty

Mario Draghi was sworn in as Italy’s new prime minister in mid-February. Ever since both the local and international press have been gripped by an irrepressible enthusiasm for the former president of the European Central Bank (ECB).

Recent examples of unbridled “Draghimania” include these articles in The New York Times and Financial Times. The arguments are more or less the same: thanks to Draghi, Italy has gone from being “the EU’s juvenile delinquent” to being “the model European”.

According to his cheerleaders in the press, Draghi is finally spearheading “reforms” that are allegedly “much-needed” by Italy — his “reform plan” recently submitted to Brussels as a condition for accessing the funds from the EU’s much-touted “recovery fund”, the European Recovery and Resilience Facility (RRF), has been extolled by Bloomberg as “a once-in-a-lifetime opportunity [to] modernise a dysfunctional state”.

Draghi is credited for allegedly “shaking up” the EU on its (notoriously slow and chaos-ridden) vaccine rollout, following his decision to seize a shipment of vaccines destined for Australia, which is said to have pushed the European Union into “authoris[ing] even broader and harsher measures to curb exports of Covid-19 vaccines badly needed in Europe”.

He has also been praised for leading the way on fiscal policy in Europe, by announcing “Europe’s biggest stimulus plan”, which is purportedly “helping to drive the bloc more into line with a push across the advanced world to prioritise extraordinary stimulus as the central response by governments to an exceptional economic crisis”.

We are being told that Mario Draghi has single-handedly kickstarted a revolution not only in Italy but across the entire EU. And all in the course of a few months. But do any of these grand claims stand the test of basic scrutiny?

Has Italy lacked “liberalising reforms” in recent decades? No — this is an old trope, particularly popular north of the Alps. The data “shows that Italy introduced liberalising reforms more intensely than most other countries, especially from 1992 on, more than Germany and, especially, France”. Just over the past decade, Italy’s “ease of doing business” ranking, according to the World Bank, has jumped from the 78th to the 58th position, a 20-notch improvement — with no noticeable impact on growth. If anything, the introduction of these reforms, as I explain here, has coincided with the beginning of the stagnation of the Italy’s economy.

As for the notion that Draghi has “shaken up” the EU’s vaccine rollout, it’s not clear what this refers to. The EU continues to lag dramatically behind other advanced (and even many non-advanced) nations in terms of vaccine coverage, and its procurement strategy faces one hurdle after another. Furthermore, regardless of one’s opinion on the issue, the EU has not implemented a vaccine export ban: the latest data shows that the European Union continues to export more vaccines than it administers. 

Finally, Draghi’s “massive” stimulus plan, upon closer inspection, is much less impressive that one may think. Draghi has announced that he will push the government’s deficit to 11.8 per cent of GDP. Now, while that may sound like a lot, one should keep in mind that last year’s deficit was 10.8 per cent of GDP. So we are in the presence of a one-per-cent increase in the deficit, at best. This is not much of a stimulus.

Draghi is on track to becoming a Macron 2.0: at the time of his election, the French leader was eulogised by the mainstream media as a great modernising, pro-EU reformer as well; today he has one of the lowest approval ratings in Europe. You can gloss over reality as much as you like, but sooner or later it catches up with you.

Join the discussion

  • It’s hard to imagine a truly reformist leader in any EU country. The whole block is tied up in so much red tape emanating from Brussels, I doubt any one person or administration can free themselves from all that bureaucracy. The most successful leader in that regard is probably Orban in Hungary and he’s basically ignoring EU law and regulations when it suits him.

  • What annoys me about the breathless commentary on Draghi is that all journalists seem to be praising him for taking “a big risk”. Having read this article, I am not even sure whether the risk he is taking is as big as the media makes it sound. However, it is going to take Italy’s debt into never-seen-before territory…which makes the prospect of QE being tapered/interest rates rising that bit hairier.
    Funny how when Draghi takes this risk, it is “fabulous”, “the work of a maverick”, “revolutionary” and generally fawned all over. When Boris takes a risk, it is “reckless” or “populist”…or, if the risk turns into a win (see vaccine campaign), attacked at every turn.
    Utterly pathetic and completely transparent.

  • A new depression will be delivered soon enough. (Bloomberg is just the Biden Cheerleader, they are the ‘sheep whisperer’ printed to keep you all calm as the elites prepare to shave off your fleeces before you can run for the hills.)

    9/2019, “European Central Bank President Mario Draghi said the Governing Council should be open to ideas like MMT”

    MMT, before covid even hit, sounds like Italy is going for modern day Alchemy of turning ones and zeros into gold. Oh, well, it is what USA is doing.

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