One thing European leaders always knew about Italian Prime Minister Mario Draghi was he would never lose his cool.
When European Commission President Jean-Claude Juncker gathered senior policymakers on the 13th floor of the Berlaymont building in Brussels to thrash out details of the third Greek bailout in 2015, some were expecting trouble from then-Greek finance minister Yanis Varoufakis.
However, as Juncker worked line-by-line through proposed tax changes with a small group including then-Greek prime minister Alexis Tsipras, Varoufakis was engrossed in debate with Draghi at the other end of the room, according to two people who were present. At 3am, the anti-capitalist firebrand and the head of the European Central Bank (ECB) were debating GDP deflators and macroeconomic policy dilemmas from the 1930s like a pair of academics.
Three days later, Draghi shut off emergency liquidity to Greece and Tsipras eventually signed up to a version of the deal agreed that night.
This episode serves as a reminder of the qualities the 73-year-old veteran brings to the table. He is calm, ruthless and completely on top of the brief.
Draghi is not your typical central banker, according to a senior EU official who dealt with him first hand during his eight years at the helm of the ECB, and he is no ordinary technocrat. He is highly political and understands how to wield power, the official said. His return to the leaders’ council marks the arrival of a heavyweight who is respected across the EU’s political and geographical divides.
“Draghi’s authority, his confidence with European and world leaders, and his granular knowledge of procedures and institutions will definitely be consequential,” says Filippo Sensi, an Italian lawmaker who worked as a spokesman for two of Draghi’s predecessors.
During his time at the ECB, Draghi was one of the few outsiders who would prompt leaders to look up from their phones and listen when he entered the room, remembers one former prime minister. The central bank chief’s presentation would often open the summit discussion and, as the first to speak, he would shape the debate that followed, a senior official said.
He could spur leaders to action by describing even the gravest scenarios in a concise, sharp and factual way, one senior official said, while several other diplomats recalled that he remained cold-blooded and composed in the tensest moments.
His premiership comes with German Chancellor Angela Merkel preparing to step aside, French President Emmanuel Macron facing a difficult election next year and the EU as a whole shaken by the trauma of the COVID-19 pandemic.
Senior officials have high hopes for Draghi and believe he is uniquely positioned to drive change at home and in Brussels, but one summit veteran said he was worried that expectations fail to take account of how the complex domestic situation could undermine his position and power, and warned there is a risk of disappointment.
The task of fixing Italy has proved too much for a succession of prime ministers over the past two decades and Draghi has two years at most before another election is due.
“For Italy and for the system as a whole, this is a moment that is very delicate for the EU’s future,” Sensi said.
Draghi takes office with a wide parliamentary mandate and high polling numbers. Recent figures show about 65 percent of voters are optimistic about his prospects.
However, Italy’s economy had stagnated for years before the pandemic claimed more than 95,000 lives and left public debt approaching 160 percent of GDP. Draghi’s challenge is to use the might of the EU’s 750 billion euro (US$910 billion) recovery package to boost long term growth by cutting red tape, helping young people to find good jobs and fixing the logjam in the courts which scares off potential investors.
Like the EU’s other 26 leaders, Draghi’s immediate priority will be the recovery from the pandemic and getting people vaccinated quickly. Beyond that, he has a chance to complete a strategic plan — and legacy — that he himself mapped out during his time with the ECB in Frankfurt and since.
Draghi used to tell leaders that recovery from the financial crisis would involve three legs, a senior official said. The ECB needed to buy time, which it did by buying up government debt. Next the bloc and its institutions had to build fiscal capacity — and the recovery fund is a key step on that path.
Finally, member states have to use that time and those tools to take serious measures to upgrade their economies. In Italy, the most important economy in that process, Draghi now gets to take charge of the overhaul himself.
The prospect of future European integration may hinge on whether he succeeds.
France’s Macron and German Finance Minister Olaf Scholz, an outsider to succeed Merkel as chancellor this year, have both insisted that the recovery fund should be a step toward deeper fiscal integration.
However, establishing more permanent fundraising capabilities will effectively depend on the success, or failure, of how Italy spends the 209 billion euros it will receive through the pandemic recovery funds, according to two diplomats from different ends of the continent.
In the eyes of the so-called frugal member states, such as the Netherlands, Draghi has the credibility to make the case for deeper integration, one of the diplomats said. Dutch Prime Minister Mark Rutte and his allies will know that he backs his arguments with facts and not populistic narratives.
If it works, in a few years’ time he may be able to cash in on that trust and push for a more permanent tool, the diplomat went on to suggest. However, if he fails, the diplomat said, the consequences will be felt well beyond Italy’s borders.
The narrative surrounding Indian Prime Minister Narendra Modi’s attendance at last week’s Shanghai Cooperation Organization (SCO) summit — where he held hands with Russian President Vladimir Putin and chatted amiably with Chinese President Xi Jinping (習近平) — was widely framed as a signal of Modi distancing himself from the US and edging closer to regional autocrats. It was depicted as Modi reacting to the levying of high US tariffs, burying the hatchet over border disputes with China, and heralding less engagement with the Quadrilateral Security dialogue (Quad) composed of the US, India, Japan and Australia. With Modi in China for the
The Jamestown Foundation last week published an article exposing Beijing’s oil rigs and other potential dual-use platforms in waters near Pratas Island (Dongsha Island, 東沙島). China’s activities there resembled what they did in the East China Sea, inside the exclusive economic zones of Japan and South Korea, as well as with other South China Sea claimants. However, the most surprising element of the report was that the authors’ government contacts and Jamestown’s own evinced little awareness of China’s activities. That Beijing’s testing of Taiwanese (and its allies) situational awareness seemingly went unnoticed strongly suggests the need for more intelligence. Taiwan’s naval
A report by the US-based Jamestown Foundation on Tuesday last week warned that China is operating illegal oil drilling inside Taiwan’s exclusive economic zone (EEZ) off the Taiwan-controlled Pratas Island (Dongsha, 東沙群島), marking a sharp escalation in Beijing’s “gray zone” tactics. The report said that, starting in July, state-owned China National Offshore Oil Corp installed 12 permanent or semi-permanent oil rig structures and dozens of associated ships deep inside Taiwan’s EEZ about 48km from the restricted waters of Pratas Island in the northeast of the South China Sea, islands that are home to a Taiwanese garrison. The rigs not only typify
A large part of the discourse about Taiwan as a sovereign, independent nation has centered on conventions of international law and international agreements between outside powers — such as between the US, UK, Russia, the Republic of China (ROC) and Japan at the end of World War II, and between the US and the People’s Republic of China (PRC) since recognition of the PRC as the sole representative of China at the UN. Internationally, the narrative on the PRC and Taiwan has changed considerably since the days of the first term of former president Chen Shui-bian (陳水扁) of the Democratic
RSS