This week the former president of the European Central Bank Mario Draghi published an editorial in the Financial Times to propose a strategy to contrast the upcoming continental recession, brought about by the coronavirus pandemic: a higher public debt and private debts write-off – i.e. the total reversal of the economic and fiscal priorities that have governed the choices of institutions and member states of the euro zone so far.
Draghi’s op-ed appeared after months of absolute silence in public, it was published in the most important newspaper in all over the world and not without informing confidentially before its release the Italian head of State, Sergio Mattarella. Draghi never talked nonsense and for this reason it was an absolutely important message. Already at the end of his mandate in the Eurotower he had given several speeches to affirms his ideas as a statesman and no longer as a European bureaucrat.
This time the FT op-ed came after his name had been evoked for weeks by a cacophony of voices which had identified him as the only ‘deus ex machina’ able to resurrect the fortunes of Italy and, consequently, also of Europe in this crisis. This is that because today Draghi is not perceived as a pure politician, but rather as a true statesman of international standing who has earned his ranks and the people’s respect on the field – therefore a giant among the many dwarfs who have assumed the reins of European politics in the last period.
The former director general of the Italian Treasury is perfectly aware that this time the emergency will be much more violent than in the past and that the void in which European leaders are operating is likely to disrupt the future of a united Europe forever. Within the continent there is an absence of strong political leadership, able to coordinate the many national initiatives and with single member States that excite ideological conflicts, fuelled by the traditional accusations of mutual blame. Proof of this is the prompt re-emergence of the painful contrast between ant and crickets, or between fiscally conservatives Northerners and reckless “ClubMed” countries.
Draghi’s message is instead simple and straightforward: this time it’s nobody’s fault and we need to react with new tools in order not to be overwhelmed from the deep slump caused by the coronavirus. Nine European countries, including Italy, France and Spain, have embraced his ideas, asking the other heads of State and government of the EU countries for an increase in public debt to be shared by all through Eurobonds. A real heresy for the Northern partners in light of the burden of the past, although a compromise will perhaps be reached given the fact that Italy retains an enormous blackmail power. Its large and rich internal market, its technological sophistication and its inclusion in the German production chain make it a fundamental element for Germany’s economic might. To such an extent that keeping it engaged in a free trade area and with a common currency is a strategic imperative for any government in Berlin. Hence the threat made by Premier Conte to European leaders.
In the meantime, waiting for Draghi, the insolvency of Italy is literally at stake, with the risk that the lockdown paralysis imposed by its own government for reasons of health safety will bring the EU’s third economy into bankruptcy. With fatal consequences for everyone.