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The Italian Job

Episode 119

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Guest: Arturo Zampaglione, New York correspondent for La Repubblica for nearly 20 years and author of The Anti-Egalitarian Mutation.

The Economist named Italy 2021’s ‘Country of the Year’. Recent economic reforms under Prime Minister Mario Draghi catapulted the politically volatile country into a – dare we say it – period of stability and reform. Can good times last?

Yes, at least a while longer. This week, we’re joined by Arturo Zampaglione, a long-time correspondent for La Repubblica in New York, one of Italy’s most respected daily newspapers. Italy, and the world, celebrated the re-election of President Sergio Matarella, which also ensured Prime Minister Mario Draghi’s position for an additional year. So far, Prime Minister Draghi has managed to keep the country’s economy growing and its vaccine calendar in check. His popularity is strong both at home and abroad. While the business environment is complex and lingering structural fractures remain, most agree that Italy’s recovery plan is ahead of even France and Germany. Our guest discusses the strengths of Mario Draghi along with present and future risks to Italy’s growth and stability. 

In addition to his work for La Repubblica, Arturo Zampaglione taught international journalism at New York University and wrote The Anti-Egalitarian Mutation.  He studied in Rome and Boston, where he completed a master’s degree from the Fletcher School of Law and Diplomacy.

In a dark year for most of the world, Italy has done surprisingly well. This has in large part been credited to the leadership of Prime Minister Mario Draghi. Is the credit deserved? Has his leadership been critical to the success of the last 15 months? Zampaglione says, “Yes, definitely. So, first of all, let’s start from the economic data. GDP grew 6.5% in the same year he was Prime Minister. That’s the fastest rate in 27 years and exceeded the expectations of many economists. […] For example, Fitch, the rating agency, was expecting a growth of the economy of just 6.3, and instead, it went over that. […] So, the general sense is that the choice of The Economist [naming Italy ‘Country of the Year’] was the right choice. And this has also created a national pride [in Italy].”

With Italian parliamentary elections coming up in early 2023, concerns over the future are still looming. The political field remains fragmented with multiple parties struggling to create a coalition capable of leading. The situation is complicated further by EU-imposed reforms that decrease the number of parliament members and senators. “This will oblige us to rethink the electoral law. Will it be based — like it is now — on single districts, or will it have a proportional approach, like, for example, in Germany? It’s still open to discussion and political parties must take a decision on this issue quickly, and it will not be easy,” Zampaglione explains. 

Given the absence of Angela Merkel in Germany and the upcoming presidential elections in France, there’s a vacuum of leadership in Europe. With Draghi at the helm, Italy’s role is growing more prominent by the day. Before becoming Prime Minister of Italy, Mario Draghi, or “Super Mario”, as he was nicknamed, was the head of the European Central Bank. There, he got to know the EU’s structure and the structures of many EU countries. “[…] A lot of Italy’s role in international affairs is linked to Mario Draghi’s role. When Draghi speaks about the need for a European army or of a more flexible approach to budget deficits, people listen in Brussels. When he calls Moscow, Putin picks up the phone. So does Xi Jinping in Beijing.”

While Italy’s Parliamentary elections next spring are a big question mark for the country’s continued stability, international issues pose a huge risk right now. Arturo Zampaglione explains, “We all know that Italy is very dependent on energy imports. Italy produces only 10% of the national gas we consume. We must buy the rest abroad. And, 43%, almost half of Italian national gas consumed in the country comes from Russia. So, there is a danger linked to the possible invasion [of Ukraine].”

Although Italy’s economy has bounced back well this past year from the Covid-induced slump of 2020, fixing its underlying sluggishness through far-reaching overhauls remains the key to ensuring the sustainability of its massive national debt. Altamar’s Peter Schechter asks, “What is needed in the next few years in Italy in terms of reforms? (https://inboundrem.com/) ” “There is a list of reforms that Italy has presented to the EU in order to receive the huge post-COVID financing. We are talking about 200 billion dollars, which for a country like Italy is a lot of money. This money will be given only if there are deep reforms in some key sectors, starting with the justice system, the procurement system, and the job market. Italy has promised to deliver on these issues. A lot will be based on how capable Mario Draghi will be to wake up the Italian bureaucracy, which is not known to be very efficient,” Zampaglione explains.

What will a new term for President Sergio Matarella and Prime Minster Mario Draghi mean for Italy? Can Italy continue with the required reforms? Can this surprising period of Italian political stability last? Find out more by listening to the latest Altamar episode, available wherever you get your podcasts. You can download the episode here.

Image Source: Roberto Monaldo/LaPresse

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Episode 119
The Italian Job