Italy's government collapses, prompting PM Draghi's resignation

Italian Premier Mario Draghi resigned Thursday after his ruling coalition fell apart, dealing a destabilizing blow to the country and Europe at a time of severe economic uncertainty brought on by the coronavirus pandemic and Russia’s war in Ukraine.

Mr. Draghi tendered his resignation to President Sergio Mattarella during a morning meeting at the Quirinale Palace. Mr. Mattarella, who rejected a similar resignation offer from the premier last week, “took note” of the new one and asked Mr. Draghi’s government to remain on in a caretaker capacity, the president’s office said. While the president could see if a new parliamentary majority was possible, his office indicated that he would dissolve the body and call early elections.

The turmoil couldn’t have come at a worse time for the eurozone’s third-largest economy. Like many countries, Italy is facing soaring prices for everything from food to household utilities as a result of Moscow’s invasion. On top of that, it is also suffering through a prolonged drought that is threatening crops and struggling to implement its EU-financed pandemic recovery program.

Any instability in Italy could ripple out to the rest of Europe, also facing economic trouble, and deprive the EU of a respected statesman as it seeks to keep up a united front against Russia.

Mr. Draghi, who is not a politician but a former central banker, was brought in 17 months ago to navigate the economic downturn caused by COVID-19. But his government of national unity imploded Wednesday after members of his uneasy coalition of right, left, and populists rebuffed his appeal to band back together to finish the Italian Parliament’s natural term.

Instead, the center-right Forza Italia and League parties and the populist 5-Star Movement boycotted a confidence vote in the Senate, a clear sign they were done with Mr. Draghi.

“Thank you for all the work done together in this period,” Mr. Draghi told the lower Chamber of Deputies on Thursday morning before going to see Mr. Mattarella. Clearly moved by the applause he received there, he repeated a quip that even central bank chiefs have hearts.

Dubbed “Super Mario” for helping to lead the eurozone out of its debt crisis when he was head of the European Central Bank, Mr. Draghi played a similar calming role in Italy in recent months. His very presence helped reassure financial markets about the debt-laden nation’s public finances, and he managed to keep the country on track with economic reforms that the EU made a condition of its 200 billion-euro (-dollar) pandemic recovery package.

He was a staunch supporter of Ukraine and became a leading voice in Europe’s response to Russia’s invasion – one of the issues that contributed to his downfall since the 5-Stars rankled at Italian military help for Ukraine.

Domestic concerns also played a role. The 5-Stars, the biggest vote-getter in the 2018 national election, chafed for months that their priorities of a basic income and minimum salary, among others, were ignored. The final straw? A decision to give Rome’s mayor extraordinary powers to manage the capital’s garbage crisis – powers that had been denied the party’s Virginia Raggi when she was mayor.

While he could not keep his fractious coalition together, Mr. Draghi appeared to still have broad support among the Italian public, many of whom have taken to the streets or signed open letters in recent weeks to plead with him to stay on.

Italian newspapers on Thursday were united in their outrage at the surreal outcome, given the difficult moment that Italy and Europe are navigating.

“Shame,” headlined La Stampa on the front page. “Italy Betrayed,” said La Repubblica.

Nicola Nobile, associate director at Oxford Economics, warned Mr. Draghi’s departure and the prospect that the country would not have a fully functioning government for months could exacerbate economic turbulence in Italy, which investors worry is carrying too much debt and which was already looking at a marked slowdown for the second half of the year.

Mr. Mattarella had tapped Mr. Draghi to pull Italy out of the pandemic last year. But last week, the 5-Stars boycotted a confidence vote tied to a bill aimed at helping Italians endure the cost-of-living crisis, prompting Mr. Draghi to offer to resign a first time.

Mr. Mattarella rejected that offer and asked Mr. Draghi to return to Parliament to brief lawmakers on the situation. The premier did so on Wednesday, appealing to party leaders to listen to the calls for unity from ordinary Italians.

“You don’t have to give the answer to me. You have to give it to all Italians,” he told lawmakers.

While the next steps were unclear, Mr. Mattarella seemed likely to dissolve Parliament after a period of consultations, paving the way for an election as soon as late September or early October. The current five-year term is due to expire in 2023.

Mr. Mattarella planned to meet with the presidents of the upper and lower chambers of Parliament later Thursday, his office said. The announcement cited the article in the Italian Constitution that says the president can dissolve Parliament.

Opinion polls have indicated the center-left Democratic Party and the right-wing Brothers of Italy party, which had remained in the opposition, are neck-and-neck.

Democrat leader Enrico Letta said Parliament had betrayed Italy.

“Let Italians show at the ballot that they are smarter than their representatives,” he tweeted.

The Brothers of Italy has long been allied with the center-right Forza Italia of ex-Premier Silvio Berlusconi and the League of Matteo Salvini, suggesting that a center-right alliance would likely prevail in any election and could propel Brothers’ leader Giorgia Meloni to become Italy’s first female premier.

Ms. Meloni, who has been gunning for an early election since before the crisis erupted, was triumphant.

“The will of the people is expressed in one way: by voting. Let’s give hope and strength back to Italy,” she said.

Some commentators noted that Mr. Draghi’s government, which has been among Europe’s strongest supporters of Ukraine, collapsed in large part thanks to political leaders who previously had ties with Russian President Vladimir Putin.

Mr. Berlusconi has vacationed with Mr. Putin and considered him a friend; Mr. Salvini opposed EU sanctions against Russia after its 2014 annexation of the Crimean Peninsula; and then there’s 5-Star leader Giuseppe Conte’s opposition to Italian military aid to Ukraine.

After 5-Star senators boycotted last week’s vote, Italian Foreign Minister Luigi Di Maio accused Mr. Conte of giving Mr. Putin a gift.

This story was reported by the Associated Press.