Italy's Draghi resigns, paving way to snap elections

Mario Draghi
Italy's Prime Minister Mario Draghi (C) stands as Foreign Minister Luigi Di Maio (L) and Italian Defence Minister Lorenzo Guerini (R) applaud upon his arrival at the Parliament, in Rome, on July 21, 2022. Italian Prime Minister Mario Draghi handed in his resignation on July 21, 2022. (Photo: AFP)
ROME — Italian Prime Minister Mario Draghi resigned Thursday after the country's fractious parties torpedoed his national unity government, kicking off a snap election campaign that could bring the hard right to power.اضافة اعلان

The internationally respected 74-year-old formally handed his resignation to President Sergio Mattarella. He will likely dissolve parliament and call early elections for September or October.

Draghi will stay on as head of the government until then.

"Italy betrayed," the Repubblica daily front page cried, while the Stampa ran with "For Shame."

Based on current polls, a rightist alliance led by Giorgia Meloni's post-fascist Brothers of Italy party would comfortably win a snap vote.

"No more excuses," tweeted Meloni, 45, who vociferously led the opposition throughout Draghi's term and has long called for fresh elections.

Draghi, a former European Central Bank chief, was parachuted into the premiership in 2021 as Italy wrestled with a pandemic and ailing economy.

On Wednesday, he attempted to save the government, urging his squabbling coalition to put aside their grievances for the country's sake.

But three parties — Silvio Berlusconi's center-right Forza Italia, Matteo Salvini's anti-immigrant League, and the populist Five Star Movement — said it was no longer possible for them to work together.

Enough craziness
The stunned center-left Democratic Party (PD), which had supported Draghi, said its hopes were now pinned on Italians being "wiser than their MPs."

Italy's latest crisis was sparked when Five Star snubbed a key vote last week, despite warnings from Draghi that it would fatally undermine the coalition.

"Enough with Five Star craziness and PD power plays: Italians now get to choose," anti-immigrant Salvini tweeted Thursday.

Though Five Star triggered the crisis, Salvini pushed Draghi under the metaphorical bus, political commentators said.

The former interior minister, who has been losing voters to Meloni, "saw an opportunity to regain his primacy, in the center-right and within the League," editorialist Marco Damilano wrote in the Domani daily.

Draghi's downfall comes despite recent polls suggesting most Italians wanted him to stay at the helm until the scheduled general election next May.

Anxious investors were watching closely as the coalition imploded.

The European Central Bank on Thursday unveiled a tool to correct stress in bond markets for indebted eurozone members, such as Italy.

Milan's stock market dropped 2.0 percent on Thursday's opening, and the spread — the difference between 10-year Italian and German treasury bonds — widened as high as 238 basis points after Draghi's resignation.

Period of uncertainty
Draghi supporters warned that a government collapse could worsen social ills in a period of rampant inflation, delay the budget, threaten EU post-pandemic recovery funds and send jittery markets into a tailspin.

Laurence Boone, France's European affairs minister, said Draghi's resignation would open a "period of uncertainty" and mark the loss of a "pillar of Europe."

The Brothers of Italy party, which has neo-fascist roots, is leading in the polls, with 23.9 percent of voter intentions, according to a SWG survey held three days before Draghi's resignation.

To win a majority, it would need the support of the League (polling at 14 percent) and Forza Italia (7.4 percent).

The PD is just behind Brothers of Italy, with 22.1 percent, but may be forced to ally with the troubled Five Star (polling at 11.2 percent) if it is to have a chance at beating the right.

Should a Brothers of Italy-led coalition win, it "would offer a much more disruptive scenario for Italy and the EU," wrote Luigi Scazzieri, a senior research fellow at the Centre for European Reform.

Research consultancy Capital Economics said there were "powerful fiscal and monetary incentives" for the next government to implement the reforms demanded by the EU or risk missing out on post-pandemic recovery funds worth billions of euros.

Brothers of Italy have repeatedly blamed the EU for Italy's troubles.

But Meloni's support for a "strong and common EU response" to Russian President Vladimir Putin's war in Ukraine "has already distanced herself from some other right-wingers in Italy and Europe," said Holger Schmieding, chief economist at Berenberg Bank.

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