Draghi..

Italy’s latest political crisis comes at a dreadful time. Prime Minister Mario Draghi, formerly at the helm of the European Central Bank, offered to resign after losing the support of a key ally in his national unity government. He may struggle to form an alternative executive, paving the way for the likely victory of a less euro-friendly government amid a spiralling gas crisis. That’s bad news for Italy and for the euro.

Draghi became premier in February 2020 to address the pandemic emergency. His decision to quit follows an open clash with the anti-establishment 5-Star Movement, which failed to back his plan to combat the rising cost of living.

Italy faces the threat of having to ration energy this winter if Russia does not resume its regular export of gas, a move that would surely trigger a recession. Keeping the experienced economist in charge at such a critical juncture would reassure investors that Italy’s already large sovereign debt, 151% of GDP, would not spiral out of control. 

Draghi would also be able to push through the annual budget law and secure the unlocking of much-needed European Union pandemic funds.

Italy followed the US on Russian Sanctions and now they are looking for Energy from anywhere and for any price. Thanks to the Sanctions.