The government of Italian Prime Minister Mario Draghi was disbanding on Wednesday evening when members of his national unity government left parliament ahead of a vote of confidence in his leadership.
Matteo Salvini’s right-wing League, Silvio Berlusconi’s Forza Italia and the populist Five Star Movement said they would boycott the vote, saying Draghi had not given adequate answers to the Italian public to urgent questions.
Draghi is expected to re-submit his resignation to President Sergio Mattarella, which could trigger early elections and aggravate a political crisis. This came after a previous offer of resignation last week, which was rejected.
The collapse of the government came after a resentful parliamentary debate on Wednesday when Draghi accused members of his coalition of wanting to subvert his political agenda, even though they claimed to profess loyalty.
He had demanded that his coalition members re-commit to his reforms, but his bet was counterproductive when the three largest parties opposed his demands.
Draghi’s departure would come as Italy faces growing economic and inflationary pressures, stemming from Russia’s invasion of Ukraine.
The prospect of prolonged uncertainty could unsettle the financial markets, the EU and the European Central Bank, which will begin a tightening cycle on Thursday that will increase Italy’s borrowing costs.
It also raises doubts about Italy’s ability to meet the conditions set by the EU for the country to receive its € 200 billion share of the € 750 billion coronavirus recovery fund. So far, Italy has received 46 billion euros with a stretch of more than 21 billion euros pending in the coming weeks.
Draghi’s resignation would leave an unfinished agenda of major economic reforms, including a review of the tax, justice and procurement system, aimed at making Italy a more attractive place to do business and improve long-term growth.
It would now be up to a new government to push through the next phase of reforms to ensure that Italy can receive the funds it has been allocated.
Draghi, a former president of the ECB, was selected to form a new government of national unity in February 2021, while Italy was recovering from the pandemic and one of the largest economic contractions in Western Europe related to the Covid.
Draghi and his team revived the Covid-19 vaccination program and oversaw last year’s economic recovery, with gross domestic product growth of 6.6%.
But the invasion of Ukraine put more pressure on the prime minister, given Italy’s historically warm ties with Russia. Draghi took a hard line against the invasion, vigorously condemning Moscow for undermining international order.
But his position and promise of military support in Ukraine worried members of his coalition, especially Five Stars, which has traditionally shown sympathy with Moscow.