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Ex-ECB Head Mario Draghi Seeks Unity as Italy’s New Leader

Daniele Lepido and John Follain
·3 min read

(Bloomberg) -- Former European Central Bank President Mario Draghi stressed the need for unity after being sworn in as Italy’s prime minister, ending weeks of political gridlock and avoiding an election during the pandemic.

Draghi was sworn in by President Sergio Mattarella at Rome’s Quirinale palace, with limited attendance because of social distancing rules. After the ceremony Draghi held his first cabinet meeting at the premier’s official residence in Rome. He unveiled his long-awaited government line-up on Friday, nominating the Bank of Italy’s Daniele Franco as finance minister.

At the meeting, Draghi stressed the need for unity, saying Italy’s national interests must come before the interests of specific groups, according to his office. He also stressed that his government would be pro-environment.

The incoming government inherits an array of problems, from a pandemic that’s claimed more than 90,000 lives in the country to a debt load at almost 160% of output in an economy mired in the worst recession since World War II. The cabinet, with several political appointees, reflects Draghi’s attempt to ensure support from the rival forces, after the collapse of the previous government of Prime Minister Giuseppe Conte.

Draghi picked a mix of technocrats and politicians from across the ideological spectrum that includes the center-left Democratic Party -- part of the Conte government -- and the anti-migrant League and Silvio Berlusconi’s Forza Italia. The new government will face confidence voters in both houses or Parliament, likely next week. The former Bank of Italy governor only agreed to form the government after securing support for most of Italy’s political parties.

Draghi’s team is evidence both of his focus on the economy and the political compromises that had to be made. In Franco, he has the director-general at the central bank he used to run. In creating a new ministry for ecological transition he won over the support of the biggest party in Parliament.

This is a government “with a clear European and Atlantist profile,” said Francesco Clementi, a professor of comparative public law at Perugia University. “The ministers’ list shows a great awareness of the technical difficulty of governing in these difficult times, but also of the political perils that brings together very different parties.”

Italy has a tradition of turning to so-called technocrats to lead governments, often at times when fragile governing coalitions refuse to tackle the deep rooted economic problems. It happened in the early 1990s when Bank of Italy Governor Carlo Azeglio Ciampi was drafted as prime minister, and again at the height of the sovereign debt crisis in 2011 with Mario Monti, who’d spent a decade at the European Commission. Then in 2018 rival populist parties tapped Conte, a law professor at a university in Florence, to reconcile their agendas.

Italian stocks and bonds have rallied since Draghi accepted a mandate from Mattarella to form a new government on Feb. 3. The spread between yields on 10-year Italian government bonds and comparable German debt, a key measure of sovereign risk, narrowed to its lowest level in more than five years, while the benchmark stock index touched a one-year high this week.

By appointing Roberto Cingolani, an executive at Leonardo SpA, he picked a trained physicist at a state-owned entity that works in security, technology and aerospace. Draghi put him in charge of 69 billion euros ($84 billion) of spending on green projects under the European Union’s recovery package.

Other key ministers include Giancarlo Giorgetti, minister for economic development. A veteran senior lawmaker with the League of Matteo Salvini, he has been pushing for the party to adopt a more pro-European stance.

There was the Five Star Movement to consider too. The anti-establishment group was still the party that won the most votes in the last election in 2018. Draghi kept one of their key figures, Luigi Di Maio, as foreign minister.

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