A pandemic, a recession and a fragile coalition

Alexandria SAGE & Alvise ARMELLINI Italy’s new Prime Minister Mario Draghi, installed in the middle of the coronavirus pandemic and a devastating recession, unveiled on Wednesday a strategy based on speedier vaccinations, structural reforms, and appeals to national unity. Here are the main challenges the 73-year-old economist, known as “Super Mario” for helping save the euro as president of the European Central Bank (ECB), faces in his new mission. Italy is currently in its worst recession since World War II, brought about by the pandemic. But growth was already moribund before the coronavirus crisis, exacerbated by the highest debt-to-GDP ratio in the euro zone after Greece. “Today we have, as did the governments of the immediate post-war period, the possibility or rather the responsibility to start a new reconstruction,” Draghi said in the Senate. Last year, Italy’s gross domestic product fell by a staggering 8.9 per cent, while almost 450,000 people lost their jobs, with disproportionately high numbers among women, young people and the self-employed. To turn the economy around, Draghi can count on some 210 billion euros ($253 billion) in grants and loans from the European Union’s virus recovery fund, but in return, he has to commit to an ambitious reform plan, subject to Brussels’ approval. In parliament, he promised three flagship reforms on taxation, public administration and justice, as well as focus on education, promoting female employment and fighting climate change. He signalled that the economy ministry — led by a technocrat ally — would have overall control of Italy’s national reform plan, which needs to be submitted to the European Commission by the end of April. The issue of control is particularly sensitive. Giuseppe Conte’s previous government collapsed in a dispute over the issue, with conflicting demands for immediate stimulus measures and long-term structural reforms. Draghi promised welfare support to “all workers” affected by the crisis, starting with those who “have paid the highest price”, but he said “it would be a mistake” to extend subsidies across the board. Draghi said fighting the coronavirus pandemic “with all means” would be his priority and promised a change of gear in a vaccination campaign that has struggled because of Europe-wide supply problems. — AFP