Draghi resigns as Europe is in flames

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The European bulwark against Russia is finally broken. In a series of political twists, Silvio Berlusconi, Italian billionaire and former Italian Prime Minister, arguably Vladimir Putin’s best ally on the old continent, emerged as the key player on Thursday in sending current Italian Prime Minister Mario Draghi packing from Palazzo Chigi.

Berlusconi with the support of the Northern League’s Matteo Salvini took advantage of the political crisis started by former Prime Minister Giuseppe Conte and his pro-China Five Star Movement (M5S), to push US ally Mario Draghi from power.

This has sent Italy to early elections and plunged Europe into financial and political crisis as Europe suffers a heatwave and uncontrolled forest fires. Stock markets all over Europe reacted negatively to the news and in the morning trading session, the Milan Stock Exchange had already lost 1.7 per cent before Draghi’s official announcement.

Mario Draghi, famous as European Central Bank’s long-standing President, defended the Euro in 2012, with his famous “whatever it takes” strategy. He is a globally well-respected economist and led a 17-month “national unity” coalition government in Italy which was tasked with across the board reforms, a condition from the European Union for its 300 billion euro + stimulus of post-Covid reconstruction grants and investments.

With Draghi gone, not only is the next installment of the EU grant at risk but also whoever follows as Prime Minister after the elections in September/October will have a very short window to have the annual budget passed through a new parliament.

Draghi’s departure weakens Europe tremendously. After Angela Merkel’s departure and French President Emmanuel Macron’s party facing exceptional losses in the French Parliament, Draghi was the leader who led Europe’s charge of the unquestioning support of Ukraine. His departure was celebrated by former Russian President Andre Medvedev. While superficially Draghi’s departure can be credited to a series of byzantine Italian political maneuvers, Russia and China’s initiative and support cannot be ruled out.

Giuseppe Conte, during his Prime Ministership, signed the Belt and Road Initiative (BRI) with China making Italy the first G7 economy to do so. Draghi had angered Conte’s pro-China party, by repeatedly using his golden veto to block the purchase of Italian companies by China under National security considerations.

Draghi’s fall started with infighting between the pro-Russia and pro-Draghi factions of the M5S over the supply of arms to Ukraine with former M5S political chief and Italy’s Foreign Minister Luigi Di Maio leading a faction of 57 M5S MP’s to split with the party. Conte then started a constitutional crisis on a financial reform bill effectively destroying the “national unity” pact under which Draghi was operating.

For the Italian right wing, which has traditionally been very close to Russian President Vladimir Putin, this was the perfect opportunity to push for elections. Silvio Berlusconi has often hosted the Russian President in his exclusive estate in Sardinia and there have been rumours of illegal Russian campaign funding to Salvini’s Lega Nord, even though accusations have never been proved.

Early elections put Italy into a huge crisis during a scorching summer and a historic drought which is expected to worsen economic conditions in Italy and Europe after a disastrous pandemic. The European Central Bank is expected to announce an increase in interest rates, the first in 11 years.

The European Union has asked member states to reduce gas consumption by 15 per cent by March 31, 2023, expecting a further cut in Russian supplies of gas. Industries have already opposed the move announcing any power or gas rationing would most certainly result in remarkable reduction in production which may cause mass bankruptcies.

Elections in Italy open the door to the victory of the right-wing paving the way potentially for Italy’s first female Prime Minister. Giorgia Meloni, leader of the Brothers of Italy party, has opposed Draghi’s government as well as the Italian support of Ukraine in the Russian war. Her party is expected to fare better than Matteo Salvini’s Lega Nord and she enjoys Berlusconi’s support. A right-wing government in Italy is of great concern to Biden’s US agenda of bringing Russia to its knees, with Germany not very supportive of sanctions on Russia. A reticent Italy, with a Pope who has often called for peace, will complicate US ambitions of seeing the destruction of Russia through the Ukraine war.

With “Super-Mario’s” departure it promises to be a hot European summer with the Italian political drama dictating the future of the European Union and the Ukraine war.

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