Italian Prime Minister Mario Draghi handed in his resignation on Thursday, the office of President Sergio Mattarella said, after his national unity coalition government crumbled.
Draghi submitted “his resignation and that of the government he heads,” said the brief statement. The president “took note of this” and the government remained in place to “conduct current business,” the statement added.
Italian ministers headed to central Africa Wednesday in an urgent quest for new energy deals as Italy scrambles to break away from Russian gas over the Ukraine war.
Prime Minister Mario Draghi is looking to add Angola and the Congo Republic to a portfolio of suppliers to substitute Russia, which provides about 45 percent of Italian gas.
“We do not want to depend on Russian gas any longer, because economic dependence must not become political subjection,” he said in an interview with the Corriere della Sera daily published on Sunday.
“Diversification is possible and can be implemented in a relatively short amount of time — quicker than we imagined just a month ago,” he said.
Draghi was due to go himself but after testing positive for Covid-19, sent Foreign Minister Luigi Di Maio and Ecological Transition Minister Roberto Cingolani in his place.
They were due to arrive in Luanda on Wednesday evening, before heading to Brazzaville on Thursday, accompanied by Claudio Descalzi, chief executive of Italian energy giant ENI.
“This is a race against time to make sure we stock gas and oil for the next winter season,” said Francesco Galietti, head of Rome-based consultancy Policy Sonar.
In Angola, the ministers were due to meet with President Joao Lourenco — who also spoke by telephone Wednesday with Draghi — before signing a “declaration of intent” on energy cooperation, officials on both sides said.
A similar declaration will be signed in the Republic of Congo following talks with President Denis Sassou Nguesso, Italy’s foreign ministry said.
The foray follows the signing of agreements with Algeria and Egypt in recent weeks.
Algeria is currently Italy’s second-largest supplier, providing around 30 percent of its consumption.
ENI said the deal with Algeria’s Sonatrach would boost deliveries of gas through the Transmed undersea pipeline by “up to nine billion cubic meters per year” by 2023-24.
Transmed only had a spare pipeline capacity of 7.8 billion cubic metres per year in 2021 — though it has said it is ready to expand.
Italy has also been in talks with Azerbaijan over the expansion of the Trans-Adriatic Pipeline (TAP).
The Egypt accord could result in up to three billion cubic meters of liquefied natural gas (LNG) bound to Europe and Italy, in particular, this year, ENI said.
Italy is looking into buying or renting two floating storage and regasification units (FSRU) to allow it to import more LNG.
Diversification will not be cheap, warn experts, who foresee extra taxes passed on to businesses and families.
Davide Tabarelli, head of energy think tank Nomisma Energia, said Rome was rightly exploiting the “excellent relationships” that ENI has built up over 69 years in Africa, where it is the sector leader in terms of production and reserves.
But the idea of replacing Russian gas “in the short term” was “fanciful”, he told AFP. “It will take at least two or three years.”
The government said it expects to get the floating regasification units into place within 18 months.
It has also talked of kick-starting stalled projects for two onshore regasification plants, which would take some four years to build.
Italy is one of Europe’s biggest guzzlers of gas, which currently represents 42 percent of its energy consumption, and it imports 95 percent of the gas it uses.
The government hopes to reduce that by accelerating the investment in renewables and has vowed to cut red tape on wind and solar farms.
Draghi has called for a collective sacrifice, asking Italians this month: “Do we want to have peace or do we want to have the air conditioning on?”
His rallying cry was met with some grumbling in a country feeling the effects of global heating, which science shows is driven by the human burning of fossil fuels.
Undeterred, the government is readying the so-called “operation thermostat”, which could see the public sector turn down heating in schools and offices by one degree, and the equivalent for air conditioning in the summer.
The rule would apply to private households and companies too, though it would be difficult to police.
It could save some four billion metric cubes of natural gas a year — or around 14 percent of the total gas imported from Russia, according to La Stampa newspaper.
Mario Draghi was formally sworn in as Italy’s new prime minister on Saturday, following weeks of instability in the eurozone’s third-largest economy.
The appointment of the 73-year-old known as “Super Mario” capped weeks of political instability for the country still in the grips of the health crisis that has killed more than 93,000 people.
“I swear to be loyal to the Republic,” recited Draghi, as he stood before President Sergio Mattarella in the ornate presidential palace in a televised ceremony.
Members of his new cabinet, who include technocrats, veteran politicians and ministers held over from the previous government, each took the oath of office.
Draghi was parachuted in by Mattarella after the previous centre-left coalition under premier Giuseppe Conte collapsed, leading Italy rudderless amid the worst recession since World War II.
After assembling a broad-based coalition, on Friday night he formally accepted the post of premier, publicly revealing the new cabinet for the first time.
On Wednesday, Draghi will be presented to the Senate, the upper house of parliament, followed by the lower Chamber of Deputies on Thursday for a confidence vote that will give the final official blessing to his government.
“Break a leg,” read the headline on La Stampa daily Saturday, as an Ipsos poll in the Corriere della Sera daily showed 62 percent of Italians supporting Draghi.
Following the swearing-in, Conte greeted his successor in Chigi Palace, the prime minister’s office, during a short ceremony, receiving sustained applause from civil servants in the courtyard before departing in an official vehicle.
Conte’s final months in office were marked by political turmoil but the former law professor — who rose to power in 2018 with no prior political experience — represented for many Italians a comforting, steady hand during the darkest moments of the pandemic last year.
– Coalition, for now? –
Draghi has the support of a rainbow coalition ranging from leftists to Matteo Salvini’s far-right League.
It includes the populist Five Star Movement (M5S), the centre-left Democratic Party (PD) and Italia Viva — who made-up the previous government before falling out over the handling of the Covid-19 pandemic.
M5S, parliament’s biggest party that began life as an anti-establishment movement, was split over whether to support a government led by an unelected technocrat.
But in an online vote, members backed Draghi by 59 percent, after securing the promise of a new super-ministry for “ecological transition”.
That post has gone to renowned physicist Roberto Cingolani, who works at Italian aeronautics giant Leonardo.
The senior deputy governor of Bank of Italy, Daniele Franco, was named economy minister, while Roberto Speranza and Luigi Di Maio stay on at health and foreign affairs, respectively.
– Challenges await –
Italy has high hopes for its new leader, who famously said he would do “whatever it takes” to save the eurozone in the midst of the 2010s debt crisis.
Although he himself has no political power base, Draghi relies on years of experience in the Italian civil service, as well as his banking career.
His arrival was cheered by the financial markets with Italy’s borrowing costs dropping to a historic low this week.
Nevertheless, “it is difficult to overstate the scale of the challenges that Draghi and Italy face”, said Luigi Scazzieri of the Centre for European Reform.
The Covid-19 shutdown and waves of subsequent restrictions caused the economy to shrink by a staggering 8.9 percent last year, while more than 420,000 people have lost their jobs.
The virus remains rife and Conte’s cabinet, in one of its last acts, on Friday tightened curbs in four regions and extended a ban on inter-regional travel.
Like other European Union countries, Italy has also fallen behind in its vaccination programme, blaming delivery delays.
The country is pinning hopes on receiving more than 220 billion euros ($267 billion) in EU recovery funds to help get back on its feet, but analysts expect uphill challenges for Draghi in pushing through structural reforms.
The Central Bank of Nigeria (CBN) has announced plans to maintain the Monetary Policy Rate (MPR) at 11% as well and the Cash Reserve Ratio (CRR) at 20%.
Rising from its Monetary Policy Committee meeting on Tuesday, the Governor of the Central Bank, Godwin Emefiele said that the apex bank is also maintaining the asymmetric corridor of +200 basis points and -700 basis points around the MPR.
Speaking on the foreign exchange market, Emefiele said that there is need to improve the supply of foreign exchange to the market, especially from autonomous sources and maintain stability in the naira exchange rate.
He said that Nigeria is the only country where the apex bank sells to the bureau the change and as such the effect of the stoppage will not last too long.
He said the bank is fine-tuning the framework for foreign exchange management to ensure a more effective and liquid foreign exchange market.
The Monetary Policy Committee of the Central Bank began its 2-day meeting on Monday at the nation’s Federal Capital Territory, Abuja.
Focus centered on how to make decisions that will drive the economy with particular discussions on the foreign exchange market.
The meeting, which is the first for 2016, comes against the backdrop of slowing global growth and a weakening domestic economic environment, due to the fall in oil prices.
Analysts at FBN Quest believe the depletion of official reserves, the slide in the oil price and other economic issues could make a good case for Naira devaluation.
The apex bank will make its pronouncements at the end of the meeting on Tuesday January 26.
Global Financial Markets
In the meantime, central banks around the world will hold series of meeting this week to chart a way for monetary policies in their various countries.
The U.S. Federal reserve is expected to leave interest rates unchanged at its 2-day meeting which will end on Wednesday even before the recent rout in global stocks.
Equity prices from Japan to Brazil have tumbled into a bear market, China’s economy slowed and oil prices are lower, prompting European Central Bank President, Mario Draghi to warn on Thursday that downside risks have increased.
Analysts expect a rate hike this week from the Reserve Bank of South Africa with most predicting the MPC will go 50 basis points rather than 25, as it did in July and November.
The South Africa Rand tanked and bond yields soared after President Jacob Zuma fired Nhlanhla Nene as Finance Minister in December.