The relationship between Mario Draghi and the Germans was not an easy one: when he arrived at the presidency of the ECB they crowned him as Supermario depicting him with the Prussian helmet on his head, but in the end they opposed him and painted him with Count Draghila sucking up the savings of the Germany. Yet he is the man who saved the euro and Europe. Why this swing of judgments and why these complicated relationships between Draghi and Germany? As a result of his monetary policy and negative rates or because of the unconfessed prejudice against the Italian Draghi? FIRSTonline asked Regina Krieger (in the photo below), Italy correspondent of Handelsblatt, the largest German business newspaper, who observes: "It will take time even in Germany to formulate a balanced judgment on Mario Draghi but sometimes time is a gentleman ”
Mario Draghi leaving the ECB goes down in history as the President who saved the euro and consequently Europe, yet, despite this, his relationship with Germany has often been controversial, i.e. positive with Chancellor Merkel and stormy with the Bundesbank and partly with public opinion: how can this be explained?
“To tell the truth, the relationship between Mario Draghi and Germany, or a part of the Germans, hasn't always been the same, but it has changed over the years. Let us not forget that, at the beginning of his presidency of the ECB, Draghi was nicknamed "SuperMario" and respectfully depicted in German newspapers with the Prussian helmet on his head. Then the worsening of the economic crisis ended up leading a part of German public opinion to see the president of the ECB and his monetary policy as the source of all the problems and to set aside the initial goodwill towards Draghi. But, examining in more detail the change of mood of German public opinion towards Draghi, there are those who think today that in reality his policy was convenient for the German government and for Chancellor Angela Merkel who could put to good use an ECB that attacked the problems on the carpet and saved the euro and Europe by making Draghi himself pay the full price, who thus became the scapegoat for the persistent economic difficulties”.
But exactly what did German public opinion dislike about Draghi's policy? His monetary policy or the fact that, despite his undisputed institutional correctness, he was Italian and therefore the expression of a heavily indebted country, which ended up fueling adverse prejudices never confessed but rooted in Germany?
"Both things. No one has ever said it openly but the negative premonition towards the Italian Draghi was perceived with the naked eye and it is the same unfounded prejudice that, despite the go-ahead received in the European Parliament, the Eurocommissioner and former Italian premier Paolo Gentiloni also suffered. Unfortunately, sometimes nationality seems to prevail over the merit and competence of people. Then, of course, also counted the substance of the monetary policy that Draghi supported as president of the ECB with Quantitative easing and negative rates that above all the former Finance Minister Wolfgang Schaeuble saw as smoke screens. And so also the president of the Bundesbank, Jens Weidmann, who, however, Chancellor Merkel has never fully supported".
In his farewell, Draghi energetically argued that the recession is today the number one enemy of the European economy and that therefore the ultra-accommodative monetary policy will have to continue for a long time, starting with the start of the new phase of Quantitative easing on XNUMX November: this will it cause difficulties on the board of the ECB for Lagarde too?
"I really think so. The critical comments of many German economists on the sustainability of the monetary policy bequeathed by Draghi to the ECB speak for themselves and make it clear that the icy wind that has wrapped Draghi in recent times will also be present on the board of the ECB led by Lagarde. On the other hand, the policy with no end date of Quantitative easing, the trade war and Brexit also seem destined to complicate Lagarde's life more”.
Significantly, however, in recent days the German government has designated as new member of the board of the ECB Isabel Schnabel who has more reputation as a dove than a hawk: she expected such an innovative appointment and what does all this mean in the delicate relationship between the ECB, the Government and opinion German public?
“I don't think that for now that nomination is the sign of a political turning point but rather a choice that rewarded Schnabel because she was unanimously considered very competent and because she was a woman like Sabine Lautenschläger before her. She is one of Germany's best economists and for this – much more than for her Europeanism – she has been indicated for the board of the ECB. Let us not forget that Merkel herself, supporting the candidacy of Ursula von der Leyen, has made it clear that for Germany the leadership of the European Commission is more important than that of the ECB. Of course, this does not mean turning a blind eye to the future, but it is too early to understand where the evolution of the economic crisis will take Germany both internally and in terms of European politics”.
In his farewell speech, Draghi did not fail to urge countries that can afford it, such as Germany, to push investments to promote growth against the recession: do you think the German government will listen to these recommendations?
“Draghi is not the only one to advise Germany to adopt a more expansive economic policy, which is now a publicly debated topic in Germany and outside, but I would not be so sure that these recommendations, albeit authoritative, have already reached the ears of the Government of Berlin".
The negative rates desired by the ECB to counter the recession certainly cannot last forever and have created and still create many problems for the banks even if Draghi claimed, even in his last press conference as president of the ECB, that they have created more benefits than side effects on the European economy: do you think that negative rates, also given the critical reactions of German banks, have been at the top of Germany's grievances towards Draghi's accommodating policy?
"Absolutely yes. Just look at the first page of the popular tabloid "Bild" which depicted Draghi as a vampire and, playing on words, defined him as Count Draghila intent on sucking up the savings of the Germans".
But, beyond the differences on individual acts of its monetary policy, don't you think that Germany should thank Draghi for saving the euro and Europe and that the day will come when this will be recognized?
"Maybe. It will also take time in Germany to formulate a balanced judgment on Mario Draghi. Certainly without him and without his famous "Whatever it takes" we would not be where we are and perhaps one day even those who criticized him will give him credit. But, if we want to understand the psychology of the Germans which often also inspires their political judgments, we cannot forget that the syndrome of the Weimar Republic is still alive and that the fear of inflation and the fear of losing one's savings frighten and they still strongly influence German public opinion today. Sometimes, however, time is a gentleman”.
