By Swann Collins, investor, writer and consultant in international affairs. Eurasia Business News, July 20, 2022

On the left, the Prime Minister Mario Draghi, at the Italian Senate on July 19, before a confidence vote.

The upper house (Senate) of the Italian Parliament has expressed its confidence in Prime Minister Mario Draghi. 95 senators out of 315 voted in favour, 38 voted against. However, senators from the government coalition abstained, weakening the Draghi government. The former central banker may resign in coming days, as his allies (the League, Forza Italia and Five Star Movement) could make more gains in elections.

Three major parties refused to vote: the Five Star Movement (M5S), Forza Italia (Right) and the League (Anti-Immigration). These parties are part of the ruling coalition in Italy. For this reason, about one-third of senators did not vote. The vote was recognized as valid because the Five Star Movement senators did not leave the meeting room, which ensured a quorum. However, the parliamentary majority was broken.

Some anger emerged Wednesday in the voice of Mario Draghi when he addressed the senators. The former central banker recalled the work done for 17 months. “The credit for these results is yours, thanks to your willingness to put aside your differences and work for the good of the country… Italy is strong when it knows how to be united,” he said.

Mario Draghi has chosen not to silence any of the subjects that anger, directly designating those responsible for the disunity: “The reforms of the Superior Council of the Judiciary, the cadastre and the beach concessions have shown a gradual fraying of the majority on the modernization of the country.” 

In the afternoon, during the debates in the Senate, the Italian centre-right set its conditions: a new Draghi government without ministers from the M5S, such as Luciana Lamorgese and Roberto Speranza. This proposal makes possible a split between the League (National Right) and Forza Italia (Right).

Shortly after, a telephone conversation was held between the Secretary of the League, Matteo Salvini, and the Head of State Sergio Mattarella.

Forza Italia leader Silvio Berlusconi also spoke by phone with the head of state, Sergio Mattarella, and Prime Minister Mario Draghi to inform them of the decisions that had been taken by centre-right forces, gathered at the Villa Grande, Silvio Berlusconi’s Roman residence.

The dissolution of the Chambers and the general elections by October is now becoming a highly possible scenario in Italy. Barring last-minute miracles, this seems to be the fate of the majority of national unity. Matteo Salvini essentially asked Prime Minister Mario Draghi to go through a government crisis, to present a new list of ministers, to conduct consultations, a new program, and to go through a new vote of confidence. Conditions that Draghi cannot accept because they constitute a disavowal of his government. The prime minister, former president of the European Central Bank and former banker at Goldman Sachs, wants to come out with his head held high. Mario Draghi seems determined to go through the vote of confidence, in order to mark the responsibilities of the political parties withdrawing their support for the government. It seems that Salvini and Berlusconi have made a pact to go straight to new elections.

The ten-year yield on Italian bonds continued to rise today, to +3.50%, adding to Italy’s public debt burden, which stood at 150.8% of GDP in December 2021.

Piazza Affari, Italy’s stock market, closed sharply lower, suffering from fears about Prime Minister Mario Draghi’s tenure and investor concerns about a possible early end to the legislature. The FTSE Mib index ended down 1.6% at 21,348 points, making Milan the worst of the European stock exchanges on July 19.

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On 14th July Mario Draghi announced his intention to resign as Prime Minister. President Sergio Mattarella did not accept the resignation. Draghi submitted his resignation amid a government crisis exacerbated by the Five Star Movement’s refusal to vote on a confidence vote in the Italian Senate. On 20th July Mario Draghi asked the Senate to put to the vote a resolution of confidence in him.

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© Copyright 2022 – Swann Collins, investor, writer and consultant in international affairs.