The success of the Reconstruction Fund is judged in Italy

By Costas Raptis

“Whatever it takes” is the key phrase that has followed him since 2012, when, at the height of the Greek drama and the euro crisis as a whole, with his declarations as head of the ECB at the time, he prevented sweeping attacks against of monetary union.

The same phrase, however, seems to follow Mario Draghi as Prime Minister of Italy, as his country is the one where the success of the Recovery Fund is really judged and, therefore, the post-pandemic future of the Eurozone as a whole.

First disbursement

Already on November 30, Italy entered a historic threshold, as it began disbursing funds, thanks to the Ministry of Education, from the Fund, whose third largest and second most indebted economy in the Eurozone is the largest recipient.

It is estimated at 191 billion euros, or 28% of the total, the funds corresponding to the country of Mario Draghi, of which 23 billion are intended for this year. But the “price” to be paid is structural reforms, which, if the current prime minister does not succeed with the great acceptance he has secured, will probably not be achieved by anyone else.

But Italy is always Italy. And the stability of the ruling coalition led by the unelected former banker remains, despite its “imperial” style, constantly at stake. How much more so that the upcoming elections for the election of a new President of the Italian Republic, succeeding Sergio Matarella, may lead to his promotion to the highest office, opening another round of search for a prime minister, possibly an alternative governing coalition.

Skills lag

In any case, the fact that the beginning of the disbursements was made by the Italian Ministry of Education is in many ways symbolic, as it underlines the need for Italy to break away from the cachectic growth rates of the last two decades, which are largely attributed (beyond demographic shrinkage and bureaucracy) in the skills shortage of the workforce, especially in the South. The large number of young people who are out of the labor market and at the same time out of any process of education or vocational training illustrates this characteristically.

The growth deficit is Italy’s deepest problem, more so than the budget gaps (which, after all, it exacerbates by keeping its debt-to-GDP ratio low), at least as long as the country is off the radar of investor concerns in bond markets. . Which, of course, could be reversed at any moment if the man of their confidence in Prime Minister Kizzi’s palace had disappeared, or if Draghi’s successor in Frankfurt, Christine Lagarde, had decided, in the name of inflationary pressures, to withdraw the supply cushion. offers tranquility in the Eurozone. Then the fact that the pandemic crisis added another 20% -30% of GDP to the public debt of the Member States would come to the fore, with Italy especially reaching 158% at the end of 2020.

Skillful “tailoring”

At the moment, Draghi has crossed another reef, gaining the approval of the new Budget, which was dangerously delayed in being forwarded to the Senate, due to intergovernmental frictions, mainly from Matteo Salvini’s League, which was reacting to the abolition of the “100 retirement (38 years of contributions + 62 completed years of age).

After a skilful “cutting” of the more or less 528 prerequisites of Brussels and the claims of the ruling parties, the Draghi government has adopted an “expansion” budget of 30 billion euros, based on the optimistic assumption that the reaches 6% and at the same time promises a tax cut of 12 billion euros (of which, however, 8 billion depend on future consultation in Parliament, and with the social partners).

Excluding some “sweeteners” for households, such as parental leave and men, the allocation of € 52 million to reduce wage inequalities for women and increase the number of heavy and unhealthy occupations from 15 to 23, the “Bunamas” Draghi focuses primarily on business, especially construction. Sometimes under a social pretext, as in the case of subsidizing the construction or radical renovation of houses or the acquisition of a first home for young people up to 31 years old with an income of less than 15,700 euros.

Intergovernmental balances, however, imposed a cut of just 5 euros a month on the guaranteed minimum income (Reddito di cittadinanza) for the unemployed and low-wage earners, which was an emblematic choice of the ruling League and Five Star Movement parties.

Urgent challenges and international successes

Elsewhere, the Draghi government is forced to deal with pandemic and energy crises. He thus became the first in Europe to adopt a strict universal health pass (despite the conflicts it caused mainly with the dock workers of Trieste), at the same time making permanent the health personnel that were hired on a regular basis during the pandemic. At the same time, it announced major investments in the energy sector and the allocation of 2 billion euros to curb the price of electricity.

And while “inside” the prevailing debate concerns the possible transfer of Draghi to the Presidency of the Republic in February (where he is institutionally offered the opportunity to continue overseeing the government work) and how the respective ambitions of Silvio Berlusconi will be manipulated, “outside” The Italian Prime Minister recorded two major successes. The first was the successful organization of the G20 Summit under the Italian Presidency. The second, however, and with more important implications for the future, was the recent co-signing of the Kyrenial Agreement with France. And although its focus is on military cooperation and therefore hegemony in the Mediterranean, the symbolism of the confrontation with the Elysée Pact in 1963, which paved the way for European unification under Franco-German hegemony, is reminiscent of current intra-European of the “Latin bloc” to push the new German government Solz – Lindner – Greens and the “sparing bloc” as a whole, which is urgent for a return to pre-pandemic “normality”.