It was in July 2012 that Mario Draghi, then head of the European Central Bank, said he would do “whatever it takes” to defend the euro against speculative attack. Reassuring markets and resolving the eurozone sovereign debt crisis, his intervention saved Italy from additional borrowing costs, which could have sunk an economy that was “too big to fail” and imperilled the single currency. Exactly 10 years later, Mr Draghi’s premature departure as Italy’s prime minister – necessitating an early election in September – threatens to resurrect the debt demons of the past, along with some others for good measure.
Current polls suggest that the autumn vote will deliver the most extreme rightwing government in western Europe, comprising Giorgia Meloni’s post-fascist Brothers of Italy party, the nationalist League, and Silvio Berlusconi’s Forza Italia as a junior partner. As leader of the largest party, Ms Meloni – whose illiberal politics closely resemble those of Hungary’s prime minister, Viktor Orbán – would be favourite to become prime minister. This prospect would be alarming in any context. Against the continental backdrop of Vladimir Putin’s war in Ukraine, a related energy crisis and the risk of recession, it constitutes a menace to European unity on multiple fronts.
On issues such as immigration and LGBT rights, a Meloni-Salvini axis would be likely to line Italy up alongside countries such as Poland and Hungary in aggressively challenging European norms. Echoing Brexit-style arguments, Ms Meloni has called for the reassertion of the supremacy of the Italian constitution over EU law, and an “Italians first” policy on accessing welfare services and benefits. On Ukraine, Mr Draghi had become a pivotal figure in maintaining western unity and support for Kyiv in response to Russia’s aggression. But the pro-Putin track record of the Italian right does not inspire confidence that such an approach would survive a winter dominated by a Moscow-manipulated energy crisis. In 2019, the League’s leader, Matteo Salvini, described the Russian president as “the best statesman currently on earth”.
Europe’s insurance policy against a destabilising lurch to the nationalist right may lie precisely in Italy’s ongoing economic fragility. Whoever wins September’s election will be required to negotiate the rollover of €200bn worth of public debt by the end of the year. As interest rates rise to combat inflation, and Italian borrowing costs head towards the kind of levels last seen in 2012, Rome may once again need to rely on the ECB’s bond-buying largesse. The new government must also make the case for receiving the next tranche of EU recovery fund money, worth €190bn in total and originally negotiated by Mr Draghi. No future government will be forgiven for messing that up. Economic pragmatism may thus dictate building bridges with Brussels and Frankfurt rather than burning them.
It would be better not to have to find out. The centre-left Democratic party will campaign on a continuity Draghi platform. But the increasingly erratic Five Star Movement’s role in Draghi’s fall may have scotched the possibility of an electoral alliance, paving the path to power for Ms Meloni and her allies. In 2019, the Brexit crisis propelled Britain into the first winter election for one hundred years. Italy’s first summer election campaign for a century, to be conducted in searing heat, is also taking place in emergency circumstances. It may deliver a similarly disruptive outcome.
