Summary

Francesco focused on Mr. Draghi’s agenda, his cabinet, flashpoints for the upcoming year and the length that his term as PM could last. In terms of Mr. Draghi’s agenda, spending of a $200 billion+ recovery fund and a swift vaccine rollout plan to contain the pandemic are main priorities. Following the current moratorium on collective dismissals in Italy, which expires at the end of March, there will be a huge socio-economic crisis with layoff’s and bankruptcies. Draghi is largely expected to push through essential reforms to ensure the recovery fund monies are spent effectively, but this should be taken with a pinch of salt. In fact, Draghi is probably willing to succeed Sergio Mattarella as President of the Republic in January 2022. In the Italian system, Presidents are elected by Parliament (+ regional delegates). So, if Draghi wants to be elected, he needs to carefully avoid frictions with political parties. As we all know, reforms are time consuming and entail lots of frictions. That’s not something Draghi can afford with so much else on his plate already (Covid, Recovery plan, etc..). In terms of the cabinet composition, the appointment of Draghi has dealt a heavy blow to the PD leadership and Five stars, who are now diluted in a broader coalition. Based on available surveys, it appears that M5S and PD voters consider Draghi a second-best solution. Francesco delved into the consequences of this political split in society and Draghi will have to deal with those nostalgic towards the Five Star and PD parties. Former PM Conte is poised to become head of Five Stars which brings up issues on how he will interact with Draghi. Five Stars has a huge parliamentary delegation and Conte will attempt to test the patience of Draghi, however, there will be no time to waste for Draghi who must prove his cabinet is strong. Francesco preceded to discuss Draghi’s cabinet. Daniele Franco, picked specifically by Draghi as Minister of Finance and Economy, is a highly regarded economist, who has been in and out of the Treasury throughout his career and is well accepted by the ministerial structures. Franco will also lead the drafting of a recovery plan, which should be voted on by Parliament by the end of March, and the final stamp of approval by mid-April. Roberto Garofoli has been brought in as Secretary of the Council of Ministers, with the role of liaising with ministers and bureaucrats to ensure the government runs smoothly. The Minister of Health, Roberto Speranza, is expected to be bypassed by Draghi, who will more-than-likely take a lead role, with the pandemic as his top priority. A UK-style vaccine rollout is to be expected, with summer not too far away and the stakes of COVID impacting summer tourism imperative to the economy. Moving on to what Draghi will actually deliver, the main focuses will be a vaccine plan and recovery fund. Reforms will be unlikely, due to both the severity of the pandemic and the necessity for Draghi to be elected by his parliamentary peers to the position of Head of State at the end of January 2022. Remaining good terms with political parties and avoiding friction will be key for this development. However, following the Head of State vote at the end of January 2022, the power for Draghi to move a government left or right and implement his agenda and reforms will arise. In other words, Draghi will be Prime Minister for 10/11 months, and then he will either be Head of State or be doomed. For him, it’s ‘up or out’. Following Draghi’s ascendancy as President of the Republic, a new Prime Minister will come in either from this current Parliament or a new Parliament.

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