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Tuesday, October 4, 2022
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Italian Prime Minister Mario Draghi Announces Resignation


Italian Prime minister Mario Draghi | Image by NBC

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Mario Draghi, the prime minister of Italy, submitted his resignation on Thursday after coalition partner Five Star withdrew its support in a confidence vote, putting the third-largest economy in the eurozone into an apparent political crisis.

“I want to announce that this evening I will present my resignation to the President of the Republic,” he said. “Today’s votes in Parliament are very significant from a political point of view. The national unity majority that supported this government since its creation no longer exists.”

Draghi announced his resignation after disagreements among the parties about whether to deploy weaponry to Ukraine and how much relief to provide to Italian households suffering from rising inflation.

Draghi, the former president of the European Central Bank, has been in charge of a unity government since February 2021. He said the bond of trust that had kept the unity government together had failed. However, Italy’s president, Sergio Mattarella, was adamant he would not accept the resignation.

In a statement, the president said, “The President of the Republic did not accept the resignation and invited the Prime Minister to appear before Parliament to make communications so that an assessment of the situation that has arisen as a result of the outcome of the session held today in the Senate of the Republic could be carried out in its proper forum.”

Draghi is to address Parliament on Monday.

Several Italian political parties backed the president’s conclusion.

Renato Brunetta, the minister for public administration from the Go Italy party, said, “Italy, in this difficult moment, cannot do without Draghi.”

Foreign Minister Luigi Di Maio described the decision of his former party, the Five Star Movement, as “a clear act of irresponsibility, thus condemning the country to the abyss.”

Di Maio left the party last month, creating a new party called Together for the Future, which supported the president’s decision and called Draghi a “precious and fundamental” figure.

The current political crisis demonstrates how the conflict between Russia and Ukraine, the rise in energy costs, and the rising cost of living may be undermining political cohesiveness throughout Europe and making it increasingly challenging to establish durable majorities.

Draghi has been one of the loudest proponents among European politicians of economic penalties on Moscow and arms exports to Ukraine. Draghi also spoke in support of Ukraine’s application to join the EU, a stance that Germany and France have now adopted after first being dubious.

However, he has had to deal with rebels inside his broad alliance, which comprises all but one of the major political parties in the nation.

The Five Star Movement started the issue by opposing Draghi in a parliamentary vote on Thursday and has been at the forefront of those voicing concerns.

Giuseppe Conte, the head of the Five Star Movement, has criticized the government’s practice of arming Ukraine, claiming that it prevents the two sides from reaching a diplomatic settlement. Recent party divisions resulted from Conte’s position, with a sizable section centered by Foreign Minister Luigi Di Maio defecting and pledging allegiance to Draghi’s pro-Western stance on the conflict.

A position taken by the remnants of the Five Star Movement to win over lower-income voters, particularly in Italy’s impoverished south, which formerly supported the party, has called for increased government help for Italian households affected by rising energy prices.

On Thursday, the intensifying political unrest frightened investors; the difference in rates between benchmark Italian and German government bonds increased, a symptom of the unpredictability and an indication that investors seek a more significant return for holding Italian debt.

The stock market in Italy declined, bringing down other European markets. The FTSE MIB, the primary index of Italian companies, dropped 3.4%, with losses for banks led by Intesa Sanpaolo SpA, Banco BPM SpA, and UniCredit SpA. Stoxx Europe 600 decreased by 1.5%.

Elevated energy prices stemming from Russia’s war against Ukraine are expected to hurt consumer spending and increase credit risk for lenders, diminishing investor preference for banking stocks.

Sabrina Khanniche, a senior economist at Pictet Asset Management, said, “The fact that Draghi was the prime minister was quite reassuring; he brought this kind of credibility. This is quite challenging. It’s adding to problems the eurozone is already facing.”

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