Draghi the Savior, the last card of the EU

"Italy remains a socio-political volcano, both for Italian elites and the EU. Not only Berlusconi, Monti and Renzi have been burned by it - but not even the magician Draghi will be able to extinguish this fire. (...) From him one expects an institutional coup d'état in the short window of opportunity given by the temporary crisis of populism, a maneuver capable of limiting the foundations of parliamentary democracy," writes the great Austrian intellectual Wilhelm Langthaler. For Langtahler "In Italy a great class struggle is underway, the final act of a tragedy that began with the infamous Tangentopoli", from Makroskop.de a very interesting reflection of the great Austrian intellectual Wilhelm Langthaler.

Prologue: it all started with Maastricht. With the turning point between 1989 and 1991, and with that great transformation of economic policy that would lead to the signing of the Maastricht Treaty. Italy was to be the EU country that, over the years, suffered the most from the political and economic consequences of the treaty.

The collapse of social consensus in the boot is the price Italy had to pay for all this. And already the Berlusconi era could be considered a form of right-wing bourgeois populism that tried to mask this collapse: Italy was under the curatorship of the International Monetary Fund and had lost its fiscal sovereignty.

What all this could mean in concrete terms, Berlusconi had already understood when he hesitated to implement the austerity policy that a little bit all parties were asking of him and thus incurred the wrath of European institutions. The EU, the ECB and "the markets", which were showing their thumbs down to the country by demanding ever higher risk premiums on Italian government bonds, abruptly put an end to his government in 2011 with a sort of constitutional coup. President Giorgio Napolitano, with the support of the EU, in fact, since 2008 was working on the fall of the Berlusconi government and after his almost forced resignation, he put in his place the Eurocrat and banker Mario Monti. His "technical" government further radicalized the neoliberal austerity to which the country had been subjected since the 1990s, until it was followed by the government of the left-wing Blairite Matteo Renzi.

In a sense, Renzi is the missing link, the link between the past and the present. Because what he failed to achieve with his 2016 constitutional referendum, Mario Draghi should now succeed in doing - namely an EU-compliant restructuring of the Republic - to which Renzi paved the way.

After the failure of Renzi's referendum, his star eclipsed as quickly as it was born. Renzi once again would have liked to play his role of Kingmaker, but temporarily there was an interlude of populism grown outside the system, which explains the current feelings of the elites towards Draghi. With a third of the vote, the Five Star in one fell swoop in 2018 became the center of the political system exercising clear opposition to the EU regime. Driven by the pressure of the street, they had managed to get the League out of the right-wing alliance giving birth to what had been called the sovereignist government in Italy.

Once again, the President had intervened in violation of the parliamentary Constitution by dismantling the leadership of the anti-EU government. Instead of Paolo Savona, as expected, Prime Minister Giuseppe Conte had let Sergio Mattarella dictate to him for the Ministry of Economy the name of economist Giovanna Tria, considered a tool in the service of the EU elites. Thus, after the Five Star party had its wings clipped and failed to put in place the progressive social reforms they had promised, the meteoric rise of the right-wing populism of Matteo Salvini's Lega began. After a little over a year, Salvini thought he could overthrow Conte, but in fact paved the way for a social-liberal government, the Conte II - with the participation of Renzi.

The restructuring of institutions

What Renzi recently did to overthrow the second Conte government is of little relevance. There was only one thing the elites were largely in agreement on: no new elections. Already the smell of the old bipolarism was wafting in, whose unwritten law would have provided for another right-wing coalition. But the Quirinal was not playing along, and once again President Mattarella acted as a destroyer of the Constitution, rather than its defender.

The President's constant intervention clarifies what the path is that Renzi already in 2016 would have wanted to take: presidentialism as a response to the crisis of democracy and sovereignty that began at the latest with the financial crisis. For decades, in fact, elites have been grappling with the authoritarian restructuring of institutions. The progressive Constitution of 1948 is a thorn in their side because it makes the technocratic implementation of the neoliberal orientations of the EU difficult. Restructuring seems to be the instrument to make permanent the retreat of Italian democracy.

This path provides a double safeguard: on the one hand, it would keep under control the constant bickering within the elites, and on the other hand, it would keep permanently away from the institutions the latent opposition of the people .

In France, this system has worked reasonably well for at least half a century. Regular explosions of street anger have so far been successfully suppressed by the police, without ever managing to enter the political sphere. But Italy is not France.

Draghi arrives

For some years now the country's elites have had Mario Draghi ready as their ace in the hole. At first they thought of offering him the post of President of the Republic, which is to be renewed in 2022. Now, however, Draghi is needed in another position, because the system of bipolarity seems to have lost all effectiveness, as has happened with Berlusconi's numerous cosmetic surgery operations that have never managed to rejuvenate him. With the Centre-Right in government (a right-wing liberal coalition) the predictable social-political crisis in the post-Coronavirus era would have been difficult to manage. That is why other weapons are needed. What, then, is the function of Draghi's all-party government?

First, right and left-wing populism is in big trouble right now. There is a historic opportunity to reabsorb it. Whether it can be done remains an open question, but if it can be done, this is probably the right time to do it. In any case, populism currently seems to have been decapitated, and the technocratic operation could prove successful if it can be prevented from emerging as a new political articulation, at least for a time.

Second, Draghi's own life and career promise what his supporters hope for: an avowed European, indeed in some respects the proconsul of the EU, the embodiment of a Eurocrat returning home to clean it up and save it. In light of the manifest opposition and rejection of the neoliberal dictates of the EU, the parliamentary and media support Draghi seems to enjoy can be considered more than extraordinary. And this will even allow for a certain popularization of the government in large sections of public opinion - provided that the emergence of a strong opposition can be avoided.

No Monti 2.0 - Draghi's program

In other words, Draghi will face a Herculean task. Will he be able to pull it off? One thing is certain: if when the epidemic has run its course and the Covid-imposed exception is over Draghi should return to the old EU austerity, then his failure is almost certain. It seems that even he knows it, and it seems that even Berlin and Brussels have begun to understand it. A Monti 2.0 therefore seems to be out of the question.

Correspondingly vague is also the program of the Draghi government; it talks about reforming the judicial system, the public administration and the tax system - nothing different from what most Italians already think should be done. The EU workhorse, namely raising the retirement age, remains on the back burner for now, although the Conte government's pension reform, progressive in its approach, will be phased out. Further wage cuts (code word labor market reform) also do not seem to be at the center of the discussion in any way.

Much more significant, however, is Draghi's saga about good and bad debt. The good debt, he says, is the one that will be used to make productive investments. This is a very important announcement. Draghi is putting all his eggs in one basket, namely the subsidies and loans granted as anti-Corona aid, and welcomed by the EU as a milestone or as the so-called "Hamilton moment". But in truth the amount of money Italy can expect to receive is quite small compared to the demand stimulus needed and potentially subject to very harsh and neo-liberal oriented conditionalities that could derail the semi-Keynesian attempt to stimulate the economy.

It is doubtful that the operation will work, as there are many question marks. The social crisis is enormous and political calm is maintained only because of the exceptionalism dictated by the Coronavirus. In order to have a political impact, demand-strengthening measures will have to come quickly and massively, at least by the next election. But this is exactly what the EU cannot and must not afford to do, because the de facto constitution of the EU treaties is at stake.

History has also taught us - not least in France under Mitterrand - that the stimulation of domestic demand to be effective must be accompanied by protectionism. This would mean an economic policy that is not only impossible within the Eurozone and the single market with its doctrine of free trade, but that Draghi should also prevent. Draghi's mission is therefore virtually impossible unless the impulses come from the global economy.

Why Draghi is the last card of the EU

Italy remains a socio-political volcano, both for Italian elites and the EU. Not only did Berlusconi, Monti and Renzi get burned by it - but not even the wizard Draghi will be able to put out this fire.

Rather, Draghi is expected to do something else. From him one expects an institutional coup d'état in the brief window of opportunity given by the temporary crisis of populism, a maneuver capable of limiting the foundations of parliamentary democracy. In its place, they would like to set up a Bonapartist system with the help of which socio-political claims can be structurally suppressed even more effectively than in the past.

In Italy a great class struggle is underway, the final act of a tragedy that began with the infamous Tangentopoli, i.e. the explosion of the system of corruption, abuse of office and illegal financing of the parties of the First Republic in the early 1990s. For the EU, Draghi is the ace in the hole, while the defenders of democratic sovereignty currently seem to be more acephalous than ever.

But a wardrobe full of European-made institutional straitjackets is also provoking counter-movements and an anti-establishment radicalization. A kind of "gilets gialli à la italienne" may already be in the air. Resistance to closures, especially in the South with their strong social component, has already offered a taste of this. Unlike in France, popular opposition can no longer be kept away from political institutions, as the example of the 5 Stelle has already shown.

Today, the political representation of the growing number of social marginalized is orphaned, but this will not last. If Draghi fails, the crisis of the neoliberal regime would intensify, not only in Italy, but throughout the EU.