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Draghi has been unseated by a cost-of-living crisis to which Europe's leaders have no answer

THE collapse of Mario Draghi’s government will be blamed on conditions peculiar to Italy. 

Its turbulent politics, its unwieldy coalitions, the power of politicians considered unserious by the EU establishment like the maverick populists of Five Star or the authoritarian nationalists of Lega; the opposite of the “adults in the room” once invoked by former IMF chief Christine Lagarde, whose use of the term, to mean loyalists to the existing financial and economic order, was later savaged by Yanis Varoufakis in his book of the same title.

In reality the forces that brought down “Super Mario” this week apply well beyond Italy’s borders. 

The immediate cause is the cost-of-living crisis — and the way that crisis has sharpened the contradiction between the expectations of the mass of the people and the imposition, by government, of economic policies which push in the opposite direction.

Italy is unusually extreme in this regard. As the Morning Star noted when Draghi was appointed prime minister, the choice of a second unelected technocrat in a row illustrated the Italian elite’s understanding that the “reforms” it considers so essential would never be endorsed by Italians at election.

It was a plan “to let politicians off the hook for deeply unpopular policies by having them imposed by someone with no party allegiance.”

As the former European Central Bank director who was instrumental in imposing devastating punishment, via enforced spending cuts and privatisations, on Greece following the global financial crisis, it will not surprise that Draghi’s prescriptions for Italy were from the same neoliberal playbook: increased competition, a bonfire of “red tape,” “reform” to labour law and pensions.

In short the same policies which elites have foisted on unwilling European populations for years, meeting resistance which Draghi (when central bank chief) ascribed drily to the “distributional impact of reforms” (meaning that they increase inequality).

Hopes were high — among corporate “investors,” bankers and neoliberal economists, anyway — that Draghi would succeed where previous unelected technocrats like Giuseppe Conte and Mario Monti failed because the EU would incentivise reform by making access to hundreds of billions in pandemic recovery funding conditional on it.

But the crisis caused by runaway inflation, exacerbated by fallout from Russia’s invasion of Ukraine, is upsetting those calculations. Italians, like other Europeans, need pay rises and price controls.

Polls show they are opposed to their government’s subservience to US policies on Ukraine such as sending arms and imposing sanctions on Russia that raise the cost of essential goods further.

The pressure on politicians to do something about this has caused Draghi’s coalition to fall apart. 

The outcome of any resulting election is unpredictable and may well bring the far right back into government. That should not blind us to the fundamental illegitimacy of the administration now collapsing.

It rested on the willingness of a party, Five Star, founded on supposedly irreconcilable opposition to the Italian establishment to help impose that establishment’s policies.

That was not what people voting Five Star voted for, any more than Greeks who backed Syriza’s left-wing programme expected to be rewarded with the most extreme austerity in Europe.

That yawning democratic deficit, where the economic status quo is upheld however the public votes, has its parallels right across Europe. 

Including in Britain, where it is difficult to interpret the Brexit vote as anything but a rejection of the policies of the past 40 years — but we are now seeing both Conservatives and Labour reassert their loyalty to those policies.

But that status quo will come under increasing strain as the cost of living becomes intolerable for working-class households and the geopolitical consequences of the Ukraine war, including immense disruption to Eurasian trade routes that have become increasingly important for Germany and its economic satellites in recent years, spell economic havoc across Europe.

Draghi’s may not be the last government capsized in this storm.


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