Super Mario is back
Mario Draghi was President of the ECB from November 2011 to November 2019 and became world-famous for his speech in London in which he compared the euro to a bumblebee. A bumblebee is not supposed to be able to fly, but it does fly. Draghi stated that the ECB is ready to do everything it can to preserve the euro. And believe me, that will be enough’, were his words. That statement coincided with the highest interest rate on bonds of the Southern member states. Since then, those interest rates have fallen sharply. The ten-year interest rates in Italy and Greece are now at 0.66%, in Spain at 0.12%, and in Portugal at 0.06%. The Irish ten-year rate is even negative. Nevertheless, concerns about the euro’s continued existence threaten to return. Not so much because of the elections in the Netherlands or those in Germany in September. The elections in France next year are even behind the horizon. It is Italy that is once again at the political centre of the eurozone.
At the request of Italian President Mattarella, Mario Draghi will attempt to form a business cabinet. After the collapse of the Conte coalition, the only other alternative was early elections. In Italy, only the president can call early elections, but Mattarella did not feel comfortable organising them in the middle of the pandemic. It is not easy to form a new coalition in highly polarised Italy, but if anyone can do it, it is Super Mario. This is the man who could even get the Bundesbank to agree to quantitative easing. Without the right-wing Lega Nord and the anarchic Five Star Movement, all that remains is a broad coalition of fragmented centre parties. Moreover, the polls show that Lega Nord, together with Forza Italia and the Fratelli d’Italia, could achieve an absolute majority in parliament after the elections. That would be a right-wing coalition with strong anti-European sentiments. These three parties therefore prefer to call for new elections. That is also precisely the reason why the other parties do not want elections. Moreover, the Italian parliament has to elect a new president in 12 months’ time and he has a lot of power in Italy. With a Eurosceptic populist as the next President of Italy, the end of the eurozone and the European Union is very close. Any party that does not want this will therefore have to comply with Draghi’s demands. Super Mario is also uniquely capable of getting Brussels to give Italy the 200 billion from the support plan without any substantial reforms in Italy. The man is simply good with words.
This makes Draghi the only person who can save the euro not once, but twice. Draghi could become president of the ECB because he was governor of the central bank of Italy since 2006. In Italy, the governor of the central bank is appointed for life. Draghi’s predecessor, Antonio Fazio, is now 84. But Fazio was forced to resign on 19 December 2005 after a major scandal. ABN Amro tried to take over Banco Antonveneta, but Fazio pulled ahead of Banco Popolare Italiana (BPI) and Banco Popolare di Lodi. After the arrest of BPI’s top executive, a conspiracy was uncovered that revealed that Fazio and his closest associates were very receptive to gifts from the top executive. To top it all off, Fazio was officially indicted for promoting insider trading. In 2011, Fazio was even convicted of market manipulation. He received a prison sentence of 3.5 years and a fine of 1.3 million euros. That does not sound like the man who would have saved the euro. Without that failed takeover attempt by the Dutch ABN Amro, Draghi would never have got the top job at the Italian central bank and later the ECB. And Super Mario would never have been able to save the euro twice.