Draghi is fighting for Italy’s recovery plan on two fronts

Instead of the Italians’ hopes for the summer and the coming years, the Prime Minister has to deal with all sorts of disappointed expectations. The negotiations on the specific development plan are anything but easy.

Italy's Prime Minister Mario Draghi (right) and his Treasury and Finance Minister Daniele Franco

OAlthough Italy should get by far the largest share of the European reconstruction fund of 750 billion euros and thus have the prospect of better times, the negotiations on the specific plan for the new Italian Prime Minister Mario Draghi are anything but easy.

Instead of the Italians’ hopes for the summer and the coming years, Draghi has to deal with many disappointed expectations. At the moment, the focus of the media and the daily political discussions is not the chances of the new development plan, but everything that will not be included.

The disappointment arises because Draghi’s predecessor, Giuseppe Conte, who ruled until February 2021, made the EU development fund appear as an almost inexhaustible cornucopia from which many voters and client groups could be promised the fulfillment of long-cherished wishes.

Rigid selection of projects

Draghi, on the other hand, does not just want to distribute money, but rather a rigid selection of projects that really produce additional economic growth and that can also be implemented within the duration of the development plan, up to 2026. Suddenly, even the once lavish sum for Italy seems finite. According to the updated requirements of the EU, Italy is to receive 68.9 billion euros in grants and 122.6 billion euros in long-term loans from the construction fund, a total of 191.5 billion euros.

Most recently in Italy there was mainly discussion about a legacy of the previous government of Giuseppe Conte. The five-star movement that dominated the previous coalition demanded, among other things, a continuation of its “super bonus” with 110 percent subsidy for thermal insulation and energy savings in the houses until 2023. For 2023 alone, the costs will amount to 10 billion euros .

National Investment Fund

Draghi sees this program as more of a donation than an investment and is now promising funding from national budget funds. In order to dampen some disappointment with his strictness in the formulation of the Italian reconstruction plan, Draghi has also announced a national investment fund of another 30 billion euros, with projects that cannot be decided on in Brussels but in Rome alone.

Most recently, Prime Minister Draghi and his Treasury and Finance Minister Daniele Franco, appointed by the head of the Italian central bank, came under time pressure. Because the plan is to be presented to parliament this Monday, discussed there and then sent to the EU Commission in Brussels by April 30th. The previous cabinet meeting had to be postponed again and again, first from the original date on Friday morning to Saturday morning and then again to Saturday evening at 10 p.m.

Persistent doubts

On a second front, Draghi and his minister Franco apparently had to defend themselves against persistent doubts from experts from the EU Commission in Brussels. According to Italian media reports, it is questionable for them whether the extensive reforms announced by Draghi will also be implemented in parallel to the spending programs – for public administration, justice and more competition and to simplify legislation.

In addition, in Brussels one knows the slowness of the Italian administration in the administration of the usual EU funds. Therefore, it is allegedly not trusted to implement the many new tenders and programs that Mario Draghi has now put into the Italian plan for the development fund by 2026. According to Italian reports, Prime Minister Draghi shortened these discussions by giving Commission President Ursula von der Leyen a personal guarantee.