“For years,” Mario Draghi proclaimed last week, “the European Union believed that its economic dimension, with 450 million consumers, brought with it geopolitical power and influence in international trade relations.” But this year, he said, would be remembered for when that illusion evaporated. As the former European Central Bank president and erstwhile Italian premier explained, the EU has been pressured by the United States into accepting damaging tariffs and needlessly high military spending “in ways and forms that likely do not reflect Europe’s interests”, even as it had been reduced to a mere “spectator” everywhere from Gaza to Ukraine.
Draghi is often praised for his rare bluntness in assessing Europe’s condition, a quality that has earned him a reputation as one of the continent’s most insightful thinkers. And, certainly, he is right in arguing that the neoliberal architecture of the EU — grounded in “a conscious reduction of the power of states” in favour of rules-based market mechanisms — has left Europe woefully unequipped to navigate a world where military and economic power are increasingly deployed to protect national interests.
The problem is, Draghi’s so-called analyses usually amount to little more than stating the obvious — facts that are evident to anyone not blinded by ideology or vested interests. The acclaim, in short, says less about Draghi’s brilliance than about the poverty of European public debate. But even more importantly, while Draghi may correctly grasp the surface symptoms of Europe’s malaise, he consistently fails — deliberately so — in properly diagnosing their underlying causes.
For if he is right to say that the EU’s neoliberal framework — based upon state retrenchment, fiscal austerity, wage compression and an obsession with boosting exports — has weakened Europe, it’s a policy cocktail that he himself helped blend. He was an architect and enforcer of that model. Already in the early Nineties, when he was director general of the Italian finance ministry, he emerged as a leading advocate of the concept of vincolo esterno (“external constraint”) — the idea that only by “tying the hands” of national governments via a political-economic straitjacket could neoliberal reforms, which lacked popular support, be forced through. That external constraint was, of course, the European Union, and above all the single currency, whose roadmap was laid out in the Maastricht Treaty of 1992. In that position, Draghi was also instrumental in driving forward the large-scale privatisation of Italy’s state-owned enterprises.
Over the next three decades, moving between the private sector (notably Goldman Sachs) and senior public posts, Draghi established himself as one of the foremost champions of neoliberal orthodoxy. This role reached its fullest expression during his tenure as president of the ECB from 2011 to 2019, and the act that symbolically marked the beginning of his tenure couldn’t be more paradigmatic.
In August 2011, at the height of the so-called “euro crisis”, Draghi and his outgoing predecessor Jean-Claude Trichet sent a letter to the Italian government. Intended to remain secret, it was subsequently leaked. The letter claimed that Italy’s post-crisis deficit-cutting plan was “not sufficient”, and set out detailed demands, including “the full liberalisation of local public services”, “large scale privatisations”, wage reductions and even “constitutional reform tightening fiscal rules”. Giulio Tremonti, Italy’s then-minister of economy and finance, later privately told a group of European finance ministers that his government had received two threatening letters that year: one from a terrorist group, the other from the ECB. “The one from the ECB was worse”, he quipped.
Draghi must have concluded that the conditions set out in the letter had not been met, because a few months later he “forced” (to quote the solidly neoliberal Financial Times) Silvio Berlusconi to leave office in favour of the unelected Mario Monti. Draghi achieved this by discontinuing the central bank’s Italian bond purchases — thus deliberately causing interest rates to rise above safety levels — and by making Berlusconi’s ouster the precondition for further ECB support of Italian bonds. This was belatedly admitted by none other than Monti himself, who claimed in a 2017 interview that, in late 2011, Draghi “decided to stop the purchases of Italian government bonds, which had kept the Berlusconi government afloat in the summer and autumn of 2011”.
It is hard to imagine a more disturbing scenario than a supposedly “independent” and “apolitical” central bank using monetary blackmail to oust an elected government from office and impose its own political agenda. Yet all evidence suggests that this — a monetary coup d’état — is exactly what happened in Italy in 2011. Just a few years later, Draghi deployed the same tools against Greece, effectively shutting down the country’s banking system to force the government to comply with EU-demanded austerity policies, which Yanis Varoufakis, Greece’s then-finance minister, likened to a form of “economic waterboarding”.
Even in his brief role as Italian premier, between 2021 and 2022, Draghi continued these policies. The few “structural” measures enacted by his government were all aimed at promoting privatisation, liberalisation, deregulation and fiscal consolidation — while he imposed on his country some of the most draconian Covid policies in the world.
Overall, then, few figures over the past decades have been more unwavering in their commitment to advancing undemocratic neoliberalism than Mario Draghi. But his responsibility for Europe’s downward spiral extends well beyond his role as neoliberal enforcer-in-chief. In his speech last week, he effectively conceded that the EU had been vassalised by the United States. Yet, once again, Draghi omitted any mention of his own role in bringing about this sorry state of affairs: he has always been a staunch Atlanticist, and as such has played a key role in ensuring the EU’s structural subordination to Washington.
The EU’s response to the Russia-Ukraine crisis is a good case in point. In his much-discussed report on European competitiveness, published a year ago this week, Draghi highlighted high energy costs as one of the main reasons for the EU’s loss of competitiveness. The report emphasised that European companies face significantly steeper prices compared to their US counterparts, seriously hindering industrial growth and investment.
Fair enough — yet this was hardly an act of God. Rather, it was a direct consequence of the EU’s decision to decouple from Russian gas, which before the war accounted for almost half of the bloc’s supply, in favour of much more expensive American liquified natural gas (LNG). More to the point, this policy was vehemently supported by Draghi. Shortly after Russia’s invasion, he defended as prime minister the EU’s decision to impose a gas embargo on Russia, from which Italy imported around 40% of its gas. “Do you want air conditioning or peace?”, he asked, the logic stark in its dubiousness. Draghi was likely suggesting that sanctions would soon cripple the Russian economy and force an end to the war — a scenario that anyone with even a rudimentary grasp of economic and geopolitical realities could have dismissed from the outset.
A few months later, in a speech at the UN that in retrospect appears almost comically misguided, Draghi doubled down, claiming that the sanctions had imposed “extremely harsh costs on Russia” and had “a disruptive effect on the Russian war machine and on its economy”, making it “harder for Russia to respond to the defeats piling up on the battlefield”. As we know, none of this came to pass — the Russian economy proved resilient, the war machine kept churning, and the defeats mounted not in Moscow but in Draghi’s delusional forecasts. All of this was easily predictable, and indeed was predicted by many of us.
All this raises an obvious question: how is it that Draghi continues to be an enlightened statesman for denouncing the consequences of flawed policies he himself promoted? In a normal world, he would be laughed off the stage — or pelted with rotten eggs. That he so easily evades accountability is the clearest expression of the kakistocratic nature of EU politics, where failure is not punished but rewarded, and where incompetent leaders routinely fail upwards.
But if Draghi’s refusal to acknowledge responsibility for the EU’s problems is bad enough, his proposed solutions are worse still. For Draghi, the cure for the EU’s dysfunction is — to give the EU even more power. “The European Union will have to move towards new forms of integration”, he declared in his latest speech. Translation: yet more political, fiscal, military and technological centralisation. In other words, then, Europe’s problems, in Draghi’s view, can only be solved by transferring still more authority to Brussels and further sidelining national governments and parliaments.
But the last thing Europe needs is to give even more power to people like Draghi. On the contrary, if the continent is to have any chance of reversing its decline, it must reject the delusional dogma of “more Europe” and finally hold to account the very technocrats who built the crisis-ridden order they now pretend to diagnose.
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Author: Thomas Fazi
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