Draghi ended his eight years as the helm of the ECB in 2019, and he’s kept pundits guessing on whether he would consider a role in Italian politics

Former European Central Bank (ECB) president Mario Draghi accepted a request from Italy’s head of state to try to form a government that will tackle the twin emergencies of the coronavirus pandemic and a devastating recession.

Draghi, who played a pivotal role in steering Europe out of its sovereign debt crisis, took on the mandate of premier-designate with conditions — a normal procedure in Italian politics — after meeting head of state Sergio Mattarella at the presidential palace in Rome, secretary-general Ugo Zampetti told reporters.

Draghi will sound out leaders of political parties as he tries to forge as broad a parliamentary majority as possible. Outgoing Premier Giuseppe Conte failed in a comeback bid following the defection of a junior ally and Mattarella turned to Draghi after warning Italy could not afford to go through an election campaign amid the current crisis.

Speaking after the mandate announcement, Draghi said Italy has “the extraordinary resources” of the EU behind it, and said he’s confident that a spirit of unity will emerge from talks with party leaders.

Italy’s 10-year yield was eight basis points lower at 0.57% after earlier falling to 0.54% while the benchmark BTP-bund spread was at 105 basis points compared with a five-year low at 102 points earlier.

The country’s parties are divided on a Draghi-led government. He can count on the backing of the centre-left Democratic Party, the second-biggest force in Conte’s former alliance, as well as centrist, pro-European groups. The centre-right Forza Italia party of former premier Silvio Berlusconi could also support Draghi, although its legislators are divided.

Matteo Salvini, leader of the anti-migrant League, the biggest party in the centre-right bloc, has left the door ajar for a Draghi government. “The problem isn’t the name of the person,” Salvini told daily Corriere della Sera. “The point is what he wants to do and with whom.” Salvini said the priority for Italy should be to avoid tax increases, and reiterated his call for early elections in May or June.

But the Five Star Movement, the biggest force in parliament and Conte’s main backer in the last government, has refused to support Draghi. Vito Crimi, political leader of the group born as an anti-establishment force, said past administrations led by technocrats had created “extremely negative consequences for Italian citizens.”

The ever-fractious Five Star could, however, find itself split over the issue, with some legislators possibly agreeing to back Draghi.

Draghi agenda

If Draghi is confirmed as premier, his agenda will be dominated by the pandemic — which has caused almost 90,000 deaths in Italy — and a faltering vaccination campaign. He’ll also have to come to grips with a debt-plagued economy that shrank 2% in the last quarter of 2020, the worst performance among large European countries.

Another key item on the agenda: how to manage and spend the country’s €209bn share of the EU’s recovery package, the issue which led former premier Matteo Renzi to pull the plug on Conte’s government.

A trained economist, Draghi is credited with shoring up the euro at the height of the debt crisis in 2012 with his “Whatever it takes” speech. He started the quantitative-easing programme of sovereign debt purchases which has subsequently been expanded to become a key tool in supporting the European economy during the pandemic.

Draghi ended his eight years as the helm of the ECB in 2019, and ever since he’s kept pundits guessing on whether he’d consider a role in Italian politics.

Possible finance ministers in a Draghi-led cabinet include Fabio Panetta, an ECB executive board member, and Carlo Cottarelli, a former International Monetary Fund executive who nearly became premier himself in 2018, daily la Repubblica reported on Wednesday.