When Italian Prime Minister and former president of the ECB, Mario Draghi spoke in the EU Parliament earlier this month about the future of the EU, he emphasised the social costs that the pandemic and the war in Ukraine are imposing on the people of the EU member states. “No national budget is able to bear such efforts alone. No country can be left behind”, he said.
Draghi proposed extending the “Sure” short-time work aid used during the Corona pandemic to cushion high energy prices for the population. For long-term investments in defence, energy and food security, Draghi called for debt-financed EU aid, on the model of the Corona recovery fund. “The system of staggered payments, linked to the fulfilment of certain targets, provides an effective mechanism to control the quality of spending.”
Is this the same Draghi who, as president of the ECB, cut off financing to the Greek state? The Draghi who mercilessly unleashed the Troika on Greece to wreak the most destructive social devastation in the country in the post-war era? This is the same Draghi who oversaw the enforced Irish bail-out.
Draghi was ECB president when the ECB punished the Greek government of Alexis Tsipras because they resisted the dogma of austerity. The workers, the pensioners, the patients, the recipients of social benefits, everything and everywhere money was brutally cut. Large scale disposal of public assets and brutal conditionality left many in poverty. When the troika started its devastating work in Greece, the Greek national debt was about 150 percent of gross domestic product.
Draghi’s Italy is now one of the countries with the highest debt ratio in the world. The country’s public debt ratio has exploded and is expected to reach 160% of GDP this year. So far, however, neither the ratings agencies nor investors on financial markets are worried. The EU and the ECB as well as the IMF are oblivious.
This is due, on the one hand, to the massive bond purchases by the ECB, which thus keeps the yields of Italian government bonds low, and, on the other hand, to the EU reconstruction fund, from which Italy will receive €200 billion in the coming years.
Ironically, the EU is acting today as EU critics demanded for Greece at the time of the financial crisis. 2022’s Mario Draghi now calls for investment in public infrastructure. But, it couldn’t possibly be because of Italy’s financial situation!