Odlična analiza Bena Judaha osebnosti in politike Maria Draghija. Tehnokrata, ki je Italijo spravil v težave zaradi vključitve v evro območje (čeprav je vedel, da je monetarna integracija v EU norost), tehnokrata, ki je reševal nerešljiv problem nedelujoče monetarne unije brez fiskalne in politične unije, in tehnokrata, ki želi s pandemskim denarjem Italijo obdržati nad vodo. Tehnokrata, ki verjame, da lahko samo evropska pravila rešijo inherentni problem italijanske politične nestabilnosti. Cena njegovega tehnokratskega delovanja zadnjih 30 let je suspenz demokracije pod izgovorom reševanja “italijanskega problema”.
Pri tem sta ključni dve vprašanji. Prvič, je mogoče s pravili res rešiti nerešljiv problem monetarne integracije kulturno in politično nezdružljivih držav? Kot namig naj služi monetarna integracije nekdanje Jugoslavije, ki je za razliko od evro območja imela tudi fiskalno in politično unijo, skupno himno, štafeto mladosti in politiko bratstva in enotnosti, skupno nogometno in košarkarsko reprezentanco in skupno vojsko. In drugič, lahko še tako politično spretni tehnokrati res nadomestijo demokracijo? Moj guess na oboje je, da ne, se pa vsaj glede prvega pustim z veseljem presenetiti.
Mario Draghi is now Italian prime minister. The man who “saved the Euro” has been summoned from retirement to “save Italy” from the pandemic. There is a Europe of the mind: of Beethoven, summer holidays and the smell of coffee. Then there is Europe as it actually functions today — the Europe of Mario Draghi. A creature of the EU, understand him and you understand how to make friends in Brussels; how to win the most important battles; and how to be, among 27 countries, really European. But, above all, understand Draghi and you understand how power works in the EU. He has built a technocratic Europe and risen to its heights.
As a wave of political killings followed ’68, Draghi learned the first lesson of political life. Always find the right mentor. His name was Frederico Caffè. Amidst the clamour he lived, his students said, “like a monk”. Caffè was influential: Italy’s great Keynesian economist. Convinced Draghi was brilliant, he introduced him to Franco Modigliani, the Italian economist at MIT, who accepted him as a student. But he still had to complete his thesis. “It was on the single currency and I concluded that the single currency was madness, something absolutely not to do,” said Draghi, at an event honouring his mentor.
Those who would shape the economic discourse of the age taught Draghi at MIT. He proudly points out that five of his professors won Nobel Prizes — Paul Samuelson, Bob Solow, Franco Modigliani, Peter Diamond, and Robert Engle. His peers — Ben Bernanke, Paul Krugman, Kenneth Rogoff, Olivier Blanchard — would become high priests of the Federal Reserve, New York Times, austerity and the IMF respectively. As the new world of floating exchange rates, free flowing capital and empowered central bankers was starting to emerge, a circle of economists was coalescing. Together they shaped the neoliberal age.
Draghi was not looking for dogma. Unlike his mentors, Draghi’s economics has never set into a theory but has kept moving, always one point to the left from wherever the centre is. He sees it as pragmatism. By forty, he had disappointed the left wing Caffè. Draghi was now a Director at the World Bank. In April 1987, overtaken with grief that neoliberalism has triumphed over the left in economics, his disciples dead or fading, Caffè, the great Keynesian, disappeared. He was never seen again. Some say he committed suicide; others that he had taken himself to a monastery in the Alps, to hide from the world he saw coming.
In February 1992, Draghi is in the room at Maastricht when the Euro begins: a key counsel to the Italian prime minister, Giulio Andreotti, when he signs the treaty. He has long left Caffè, the left and his thesis behind. The mood is ebullient; the popularity and success of the new EU’s single currency will sweep all before it. So much so that at the press conference, Helmut Kohl bets six bottles of German wine that Britain will join the project by 1997. “The government always does what the City wants,” he booms. “The City will ensure that Britain joins monetary union.”
The British departed with an “opt-out”; the Italians with conditions so tough the Germans were surprised they agreed to them. Draghi’s second mentor, Modigliani, was outraged. The decision to sign was Draghi’s: he was one of two Italians with ultimate authority on assessing the terms. He had counselled the prime minister to proceed with what in his thesis he called “madness”: a currency union without a political and economic union. Why? The answer: his neoliberal theory of Italian politics.
Midday in Rome. Sometime in the 1990s. a city of politics, alleys and corridors. Bells ring in the Senate. Matters are adjourned in the Palazzo Montecitorio. Suits disperse. Reporters shout questions. The whole torrent of activity seems to spill out and invade the streets around Piazza Navona. Negotiations continue under the umbrellas at Giolitti’s gelato. Civil servants meet ministers in the Hotel Forum. This is Draghi’s natural habitat. Heading the Treasury from 1991; it was here that the fortysomething civil servant did whatever it took to join the single currency: regulating Italy’s banks, managing its debt and privatizing over €100bn. Draghi was more than indispensable. He built Italian neoliberalism.
There was no better school than Rome for Euro politics: it was already a game of weak politicians and powerful technocrats. …
Holding the country together was the strongest bureaucracy Italy had: the financial engineers in the civil service under the country’s first technocratic prime minister, Carlo Azeglio Ciampi. Draghi was in his element. Capitalism, he believed, had rules. As long as the politicians got out of the way and the technocrats set the right structure, stable growth would follow. This was the MIT philosophy. Across continents, his former student peers were rising and rising. As economists they believed in intervention: to help make the market function.
This was why the Euro was imperative. Capitalism could provide the rules — and the structure — that Italy lacked. Politicians would now be curtailed in macroeconomic policy. Signing up to a single currency put the fundamental levers of the macroeconomy — key fiscal and monetary policies — beyond domestic politics. This strategy was known as il vincolo esterno, the external bind.
Draghi’s political touch had not gone unnoticed. In parliament, he was often called “Mr. Britannia”, because of his endless meetings with London bankers. Salvatore Biasco, then a left wing lawmaker, from his committee watched Draghi slowly arrive at what would be his greatest realization: you can exert most power as a technocrat. “He behaved like a minister of the Treasury and not a civil servant,” recalled Biasco. “He was a sort of shadow Treasury minister.” Here, as an unelected politician, was where he honed the technocratic Draghipolitik that would shape Europe.
Draghi’s generation believed they had got it all right. Then 2008 hit. The financial crisis revealed these engineers had made a terrible mistake. They had broken a system they would now spend the rest of their careers trying to fix.
This would transform central bankers from the technocratic rule setters of capitalism into the political crisis managers who guided it — and in so doing reorder power in the EU forever.
Dumb luck would give Draghi his chance to join these new supermen. First a corruption scandal opened up a vacancy for governor of the Bank of Italy. Then, refusing to countenance unorthodox ECB monetary policy to fight the crisis, the head of the Bundesbank long expected to succeed France’s Jean-Claude Trichet, resigned. With Berlin now without a candidate, the ECB prize opened up to another big state’s central banker.
Draghi approached the top job politically. Again he got lucky. Jean-Claude Trichet had ended his mandate so badly that any successor would look good in comparison. In the words of the historian Adam Tooze, “On his way out of office, Trichet, by only backing austerity governments in the market, had helped Berlin to hardwire austerity into the circuit board of the EU.” It was bad economics: this led to consumption depression prolonging the recession. But Draghi would go further. In August 2011, he signed a secret letter to the Italian government: an austerity note urging cuts and labour reforms. Rome was horrified; Berlin was delighted. By signalling that Frankfurt was only prepared to put its liquidity behind a certain type of politics he opened the door to ousting Berlusconi. A technocratic government replaced him — which the fallen leader called an EU “coup”.
Draghi’s circle continued to shape capitalism: Ben Bernanke was heading the Fed and Stanley Fischer was in charge of the Bank of Israel. In Frankfurt, Draghi would treat the Eurotower like the Treasury in Rome, boasting, “In every press conference since I became ECB President, I have ended the introductory statement with a call to accelerate structural reforms in Europe.” Central Bankers had crossed the line: no longer technocrats, they were now politicians.
François Mitterrand had made the Euro his price of unification. He forced Kohl to make good on vague commitments to a single currency. France wanted the Euro to restrict German power. Mitterrand said the Deutschmark was Germany’s “nuclear weapon”. He feared unless he had a say on German interest rates, Paris would forever be forced to shadow them. He was mistaken. It wasn’t the currency. It was German credit that was the nuclear weapon. Agreeing a single currency without a Eurobond, a safe asset all could draw on to finance themselves in times of trouble, meant German bonds became the Eurozone’s safe asset. Berlin now had a de facto veto over debt politics.
Mitterrand’s mistake enhanced German power. German exports boomed; the competitiveness of Italian exports declined, France’s stagnated. The Euro had made German goods cheaper than if they had been in Deutschemarks and Italian goods more expensive than they had been in Lira. Berlin could take on new debt with little risk. The rest were not so lucky. After 2008, weaker governments needed the Union to buy their bonds, bail them out and collectivize their debt. But Kohl agreed to the Euro on condition there would be no collective debt; that the ECB would not directly finance governments. Berlin had to be convinced. Euro politics became a game where everyone danced around Merkel trying to get her to turn on the taps. At this, Draghi was king.
The EU’s problem is not that it’s a superstate, it is that it’s not a state. A crisis had appeared which had a clear solution. But no central authority existed to implement it. From Podemos to Syriza, politicians were elected to build a fairer Eurozone. But their hands were far from the real levers of power. This is where Draghipolitik came into its own: the technocratic art of moving Berlin. Through this he made the ECB a real central bank and himself a player. First, Draghi used charismatic power to move Merkel and markets. According to Nicolas Véron, one of the leading researchers on the Euro crisis, Draghi played a historical role as “the chief pedagogue” who persuaded the Chancellor to agree to a banking union in 2012. “This is where Draghi excelled, said Van Rompuy. “He had great persuasive power: talking clearly, to the point and with natural authority.” He told Merkel: this is in the German interest and it’s the bare minimum you must do. That is the strength and the limits of Draghipolitk.
Finally, Draghi mastered analytical power: that is the politics of numbers. On powerpoint in the Governing Council, Giuseppe Ragusa, a former ECB senior economist, watched him overcome the frugal Bundesbank to launch quantitative easing in 2014. “The way he was able to convince people to do what he did,” said Ragusa, “was by moving the political debate from politics to actual numbers.”
These meetings again changed European capitalism. Genuinely free markets, which had opened in the 1970s with the lifting of capital controls, closed. Directed capitalism came to Europe with the ECB incentivising markets to buy riskier assets by buying over $2.8 trillion safer ones by 2018. It was the ultimate act of intervention without redistribution. Draghi was convinced the Euro would not survive deflation and a third recession without it. But his mistakes had worsened the very problem he was trying to solve with austerity prolonging the pain in the south.
A whisperer, an enforcer, a number cruncher. These are not the qualities one expects of a great man. But that is to misunderstand how the EU works. Its machine was built to depoliticise politics; and those who do that best, thrive; the unassuming bureaucrat becomes Napoléon. Through Merkel, the media and data, Draghipolitik overcame Jens Weidmann, the head of the Bundesbank. “Draghi considered Weidmann his personal enemy,” said De Benedetti. It was mostly an icy affair. But once at dinner, said Salvatore Bragantini, a friend, his wife Maria Serenella Cappello, let this slip into the open: “‘So you are my husband’s enemy,’ she said, taking him aback.”
As the crisis made the state more dependent on finance; finance become more dependent on the state. And men like Draghi were central to it. These victories reveal enormous skill. They turned the ECB into an even more powerful institution than the Bank of England. But they also underline how badly his generation got it wrong. They had bet on a half-built house for Europe as the key to stability. But a monetary union without a fiscal union brought instability. They had bet on setting neoliberal rules for capitalism and stepping back: and it had blown up. They had bet on austerity: then faced a depression. These errors made them — the world’s elite central bankers who then had to fix it all — more powerful than most politicians.
Phone calls to the president; phone calls to Renzi; phone calls to Berlusconi; when the government of Giuseppe Conte imploded; Draghi had a pitch. He would be a technocratic prime minister: but with a twist — a mostly political cabinet bringing in all parties but the furthest Right. He was offering himself as a solution to the very problem il vincolo esterno had fuelled: weak politicians unable to lead.
“The truth,” said the historian Marcel Gauchet, “is that Europeans do not know what they have built.” This is what the struggles of Draghi reveal. As Europeans, his generation has built a halfway house for Italy. The Euro means they cannot go back to national models of economic management, devaluation and default. But the road forward: to a debt relief, transfers and fiscal union, is blocked too. Stuck, the politics of mandates won’t work: the only politics that seems to, is Draghipolitik.
But the price of Draghipolitik is this: it is consolidation without democracy. Empowered elites with alienated voters. Politics only men like him can play. Which, by weakening parties and the importance of elections, makes the only other way to get to a better Europe, a transnational, democratic movement for a fairer Eurozone, even less viable. Draghipolitik may offer a path to a technocratic solution but it exacerbates the political problem.
Today he sits on the zeitgeist: promising to begin Italy’s exit from neoliberalism, his latest fiscal thinking lines up perfectly with Bidenomics. But it is not enough. He now needs to do the opposite of what he first set out to do: and foster a new generation of strong politicians to succeed him. Only that can break the cycle that is weakening Italy.
Vir: Ben Judah, The Critic