For Draghi bring
McKinsey in as advisers makes clear whose interests will be served, and it’s
not those of ordinary Italians.
Last week, upon hearing that Mario Draghi, as Italy’s new
PM, employed McKinsey to advise the government on how to spend the billions of
the EU Recovery Fund, I tweeted, in anger and frustration: So predictable, so
sad: Mario Draghi hired McKinsey to ‘organise’ Italy’s distribution of the
Recovery Fund monies. What next? Get the Mafia to re-organise the Ministry of
followed within Italy’s twitter. Here I stand by my tweet in an
interview with La Stampa, answering also questions on Europe’s preposterous
response to the economic challenges of Covid-19 and to DiEM25’s proposals, from
March 2020, on how the EU should have responded.
In Italy your tweet about McKinsey has triggered a huge debate. Don’t you
think it was inappropriate to compare the management-consulting firm to the
PM Draghi’s decision to engage McKinsey was scandalous and
an insult to the good people of Italy. In effect, it constitutes a statement
that, to distribute EU funds, Italian democracy needs advice from a consultancy
firm with a track record bordering on the criminal. Thus the humourful, and
perfectly apt, punchline suggesting that if Mario wanted to do a little worse
he would need to engage the Mafia in re-organising the Ministry of Justice.
The Italian Ministry of Economic Affairs has explained that McKinsey’s
contract is worth approximately 20.000€ and the consulting company will not
“organise Italy’s distribution of Recovery Fund money”, as you wrote. “McKinsey
– explained the Ministry in a note – will offer only a technical-organizational support”.
Do you see that as a step forward?
I see it as a guilty attempt to wriggle out of a disgraceful
cockup. What is the difference between “helping organise” from offering
“technical-organisational support” of Italy’s distribution of Recovery Fund
money? None! As for the fee, even if they did it pro bono, their engagement is
an affront to the Italian people’s well-developed sense of decency.
McKinsey & Company is one of the most prestigious consulting
management firms in the world and has advised corporations and governments
around the world. Also France hired McKinsey to help in the pandemic. So, why
do you think it is wrong to hire McKinsey?
They are certainly “powerful”. But prestigious? Not in the
slightest. Only very recently they were fined $600 million for helping push drugs that contributed
to the death of 450 thousand Americans. Tom Peters, an ex-McKinsey employee, explained in the Financial Times how the firm cynically
calculated the expected fines to pharmaceutical companies from intentionally
causing thousands of deaths and then advised them to go ahead! So, yes, it was
more than wrong for PM Draghi to hire McKinsey. It was immoral.
No, quite the opposite. They time has come to inform the
Italian public of how hopelessly inadequate the Recovery Fund is. To begin
with, $120 of these billions are loans, which is the last thing Italy needs as
loans cannot ameliorate the insolvency problem at hand. Only around $80 billion
will come in the form of grants, to be distributed over six years, at the rate
of $13 billion every year. Compared to the increase in Italy’s debt, both private
and public, this is a drop in the ocean or, put more scientifically, it is
macroeconomically insignificant. In conclusion, sadly, what I said a year ago
is now fully confirmed.
Politically, in Italy, “The Times They Are a-Changin”. We’ve got a new
premier, Mario Draghi, and the party of Matteo Salvini have accepted to
participate in the new government of national unity. Only Giorgia Meloni is in
the opposition. What do you think about this unpredictable scenario?
A clear defeat for Italian democracy. By dominating the
opposition, Giorgia Meloni and her neofascist party will be the only
beneficiaries of the discontent that will, inevitably, grow as the overblown
optimism following Mr Draghi’s appointment gives way to the harsh reality.
Why don’t you trust Mario Draghi? In the last decade it was one of the
most important people for the survival of the euro and he has been accused of
helping Southern European countries ECB. Have his monetary policies damaged
My opinion of Mario Draghi is irrelevant. Yes, in 2015 Mr
Draghi strangled Greece’s democracy, and in the process damaged European
democracy, by shutting down Greece’s banks in order to blackmail the Greek
people into accepting yet another unpayable credit card from the troika under
neo-colonial conditions. Mario was, in my opinion, given an ultimatum by
Berlin: Crush the Greeks if you want to be allowed to buy Italian, French and
Still, if Mario had been chosen by a majority of Italians,
in an election where he had presented his program to the public, as a democrat
I would congratulate him. In other words, what is relevant is that, once again,
Italian democracy has been replaced by a system where the Prime Minister is
selected behind closed doors by political leaders striking deals that have
nothing to do with the programs they put to the people.
So what should Italy and, I would say, Europe do to the deal with the
economic depression caused by COVID-19?
DiEM25’s answer, presented a year ago, remains valid:
First, get the ECB to issue a proper, 30year, Eurobond to the tune of at least
€1 trillion and use that money, on the basis of an automated formula, to ensure
that the new debt caused by the pandemic is europeanised – as opposed to
burdening Italy, Spain, France, Greece or Germany. Second, the ECB should
regularly credit the bank accounts of every European family directly – as both
Presidents Trump and Biden have done in the US. Third, Europe should invest,
centrally, in a Green Energy Union/Grid to the tune of 5% of Europe’s GDP, to
be funded by European Investment Bank bonds that the ECB supports in the bond
What about Europe? Will it be stronger or weaker after the pandemic?
Much, much weaker. Investment fell during 2020 by 50% and
the output gap grew to 8%. The Recovery Fund will only make up for, at best,
one-eighth of this over the next few years. It is too little and it will come
too late to prevent another wasted decade for the Eurozone.
How are things going in Aegina and in Greece? I’ve read that until the
16th of March you will be still in lockdown. How is the economy going under the
conservative government of Kyriakos Mitsotakis?
Aegina remains a gem but, alas, the Mitsotakis government,
lacking anything resembling a plan, is proceeding with wishful thinking as his
only compass. As for the economy, judge for yourselves: In 2010 Greece went
bankrupt because our public debt rose to €300 billion, our GDP fell to €220 and
the budget deficit exceeded 10% of GDP. Today, public debt exceeds €355
billion, GDP languishes at €166 billion and the budget deficit exceeds 10%.
To conclude on a more political note, has DiEM25 any relationship with
the Italian Democratic Party? Do you know, or have you ever met, Enrico Letta?
neither has nor wishes to have a relationship with the Democratic Party, which
we consider to be a major contributor to Italy’s woes and, also, a stagnant
party lacking any capacity for innovative, progressive thinking. As for Enrico,
yes, I know him well and I like him very much, personally. Last time we met was
in Paris where he invited me to address his students at Sciences Po. Is it not
wonderful that politicians, economists, artists etc. can disagree strongly and
still benefit from dialogue while enjoying each other’s company?.
professor of Economics at the University of Athens, is the co-founder of DiEM25
(Democracy in Europe Movement), former finance minister of Greece and author of
And the Weak Suffer What They Must? Europe’s Crisis and America’s
Economic Future – La Stampa, Torino. English version published at his website, on 15/03/2021