Mario Draghi and Emmanuel Macron — the EU new power couple?

Mario Draghi’s appointment as Italian prime minister with wide support from most, if not all, political parties has been hailed as good news for Italy and for the EU. It is also good news for President Emmanuel Macron.

It gives the French leader a partner in Rome who is a powerful and credible advocate of closer European integration just at the time when Germany prepares for a change in leadership. When Angela Merkel bows out as German chancellor, Draghi and Macron could become Europe’s new power couple.

An alliance between the eurozone’s second and third-largest economies in favour of greater solidarity and stimulus might seem natural, but has been elusive. During the eurozone debt crisis, France was reluctant to detach itself from Berlin and align itself with other Mediterranean countries lest it widened the risk spread between French treasury bonds and German Bunds.

Two years ago, relations between Paris and Rome slumped to their worst point since the second world war, when Luigi Di Maio, then deputy prime minister, lent his support to French anti-government protesters. The pro-European French president had become a convenient target for Italy’s Eurosceptic populists seeking to whip up domestic support. There was also anger in Italy at France’s perceived lack of solidarity in the migrant crisis of 2015-16 and resentment at takeovers of Italian companies by French rivals.

Relations improved when Rome took a more pro-European turn under Giuseppe Conte’s second government. France and Italy were among nine signatories of a letter in March last year calling for a “common debt instrument issued by a European institution” to help countries stricken by the pandemic. It was the kernel of the EU recovery fund plan hatched by Paris and Berlin and adopted by all 27 member states under the name of Next Generation EU. The biggest step forward in European integration since the creation of the euro was also Macron’s biggest European achievement so far.

Draghi is in favour of more European integration, combining national responsibility with European solidarity

“Macron today has shown leadership with Next Generation EU,” says Enrico Letta, former Italian prime minister and now dean of the Paris School of International Affairs at Sciences Po. “That was not the case with Sarkozy 10 years ago. That was to keep under the German umbrella and avoid any risk. It was good for France, but the price to pay was that Europe didn’t have any solution to the crisis.”

As the biggest beneficiary of the EU recovery fund, a lot rides on Italy’s ability to spend it wisely. For Rome it is a rare chance buy productive investments. Draghi “knows probably better than anyone what needs to be done to seize this once in a lifetime opportunity to face the country’s long-lived weaknesses”, notes Silvia Merler, of the Algebris Policy Forum.

Messing it up would create doubts about Italy’s ability to survive inside the single currency. It would discredit the idea of pooling sovereignty within the EU in return for greater solidarity. Conte lacked the political support to spend the recovery fund well. That is the main reason Draghi’s anointment is so important for proponents of a stronger Europe, like Macron.

The second is the hope that having modernised monetary policy as president of the European Central Bank, Draghi can help overhaul the eurozone’s fiscal policy, with more growth-friendly deficit and debt rules and a permanent budget to help cushion shocks. Germany and other northern capitals will need persuading. But if Draghi can do some of the homework he repeatedly demanded of national governments, it will help.

“Draghi is in favour of more European integration, combining national responsibility with European solidarity,” says Marta Dassù, a former deputy foreign minister and chairman of the Aspen Italia think-tank. “They are two sides of the same coin.”

Spending EU money well and fiscal reforms are the “pillars of a good entente” between Paris and Rome, says Letta. But the two are not perfectly aligned. Both Dassù and Letta regard Draghi as an Atlanticist on security issues and sceptical, like Berlin, of Macron’s idea of “strategic autonomy” for Europe.

Macron told the FT last month he was sceptical of the routine where “Paris dances with Berlin, making Rome jealous, and when Berlin doesn’t behave nicely enough, Paris goes off and dances with Rome”. Still, he was “very happy to have (Draghi) back”, adding “I believe it is a chance for us all.”