Draghi and the risks of his position on the Ukraine war


It is well known that the Draghi government was born in February last year with a fundamental purpose: in addition to exhausting the legislature (which still had two years left to run according to the Italian Constitution, bearing in mind that the last elections were in 2018 and that there should not be elections until five years later), it had, above all, to manage as effectively as possible the 209 billion of the "Recovery Fund" earmarked for the transalpine economy. 

The President of the Republic, Sergio Mattarella, considered that, in the absence of a "maggioranza" formed by parties in the wake of the break-up of the centre-left coalition that had been governing until now, the time had come for a government of independents or, if not completely independent, then led and with the key portfolios (Economy and Finance, Justice, Interior) with independents at the helm. That is why he called on his best man, Mario Draghi, with a bulging personal "curriculum" in which his work as President of the European Central Bank (ECB) between 2011 and 2019 stood out with particular force, in order to make him the corresponding "incarico" of forming a government. 

But for Draghi and his staff everything changed on 24 February, when Russia decided to attack neighbouring Ukraine. It was then that he had to step out of his politically neutral role and decide to take a concrete position in this conflict. The issue on the table was not an easy one: on the one hand, an attacked country (Ukraine) that borders the European Union, and an aggressor country (Russia) that is a neighbour of up to four different EU members, such as Estonia, Latvia, Lithuania and Finland; on the other, a country (Russia) that is key to the eurozone's third largest economy, since many products are exported to Russian consumers, especially from the country's two richest regions (Lombardy and Veneto). Just as Germany is the country most dependent on Russian energy (which is why it had the Nordstream pipeline built, linking the Russian Federation with the Federal Republic of Germany across the Baltic), it is equally true that in terms of foreign trade the Russians are of enormous importance for Italy's productive apparatus. 

It is well known that the war, now inexorably entering its third month, is not turning out exactly as Russian President Vladimir Putin had hoped. On the one hand, the Ukrainian government (unlike many citizens of Kiev who fled in panic to Poland) decided to stay in Ukraine and put up with the Russian attack; and on the other, the European Union, to the surprise of many, decided to immediately side with Ukraine, even though Ukraine is not only not a member of the Union, but had not even formally applied to join the European Union. 

From this point onwards, the EU has publicly shown itself to be very solid in its position of helping the Ukrainian government through economic sanctions against Russia, economic aid and even arms shipments (although this last point is not entirely clear). But all this masks an evident division between the main European economies: on the one hand, Germany, governed by an extraordinarily heterogeneous coalition (Social Democrats, Greens and Liberals together is an alliance never seen before in this country), is doing its best to paralyse the European Union and not to anger the Russian leader (Putin) more than necessary. On the other side are Italy and France, which have been forming a "bloc" for some time after the signing of the Quirinal Treaty a few months ago and are determined to seek the collapse of the Russian economy. And in the middle of the three, Spain, which has enough to deal with in the face of the rising cost of living and the inherent weaknesses of its economy, which is heavily dependent on the hotel industry and domestic consumption. 

From a political and electoral point of view, Draghi has nothing at stake, since, not being the leader of any party or belonging to any political party, when the next general elections (called "political" there) are held, he only puts at risk his personal prestige and his chances of taking over from Mattarella as head of state, all on the basis that the Sicilian jurist and politician, who will be 81 years old in July this year, decides to resign from the presidency of the Republic for reasons of age (the same thing that happened at the end of 2014 with Napolitano would be repeated, with the difference that the latter was about to turn 90 when he decided to leave the Quirinale). 

Unlike the German chancellor and the French president, Draghi has refused to meet personally with Putin: he has limited himself to a one-hour telephone conversation, incidentally with the war already underway, where he asked him to order a cessation of hostilities and sit down to negotiate with the Ukrainian government, to which Putin flatly refused. At the same time, Draghi has made no secret that economic sanctions against Russia should be increased as much as possible to ensure that Russia desists from further war with Ukraine.  

We have previously commented that this position of Draghi's is generating enormous division within the Italian political class, although the truth is that the "maggioranza" that sustains his government, made up of all the major parties except the Brothers of Italy of the Roman Meloni, remains compact in supporting the current Executive. But the Five Star Movement has already made it known to Draghi that it wants less money to be spent on increasing the military budget and instead to allocate this money to helping the population, while Matteo Salvini remains silent while awaiting developments. Salvini and his party (the League), which has been sinking for months in the polls, know that a possible entry of the transalpine economy into recession could be of great benefit to them, given that Salvini has particularly good relations with President Putin. Not to mention that in recent years the League leader has been the main beneficiary of the malaise in Italian society. 

For the time being, the Draghi government has had to approve a first Economic Planning Document (DEF) where growth forecasts for this year are not good: 3.1% compared to the 6.6% achieved in 2021. But, if the war lasts another month, this macroeconomic picture will be "dead letter", and even more so as long as the conflict lasts, hence the risks that Draghi himself is taking by leading the tough stance with the Russian Federation. 

The key is precisely what is not known: the state of the Russian economy at the moment, and the possibility that the Russian citizenry will revolt against its hitherto untouchable leader (Vladimir Putin). There is talk of "default" and that the Russians are on the verge of defaulting on their debt, but the truth is that Putin and his core group of collaborators are still there, and that the war is still raging, albeit concentrated in the Donbas region, which is much further east than the capital (Kiev). The Ukrainian government feels stronger than ever since the beginning of the conflict, and wants to defeat a Russian army that is showing signs of weakness: it did not dare to enter Kiev and its siege of a city as apparently weak as Mariupol is costing it untold sums. 

Certainly, Draghi is a person characterised by his prudence, his ability to analyse risks and his very good sources of information. But it is equally true that he is gambling everything on one card: the fall of Putin or, at least, the withdrawal of the Russians from Ukrainian territory. The longer the war lasts, the greater the recession in an energy-dependent European Union. Time will tell whether Mario Draghi is right or wrong: so far, his actions have been right, but of course he, like others, is not infallible. Hence the riskiness of his position in this conflict: it will be the course of events that will pass judgement. Time will tell.

Pablo Martín de Santa Olalla Saludes is Professor at the Centro Universitario ESERP and author of the book Historia de la Italia republicana, 1946-2021 (Madrid, Sílex Ediciones, 2021).