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Former European Central Bank President Mario Draghi speaks during a news conference at the Quirinale Palace, in Rome, on Feb. 3, 2021.

FRANCESCO AMMENDOLA/Reuters

About a decade ago, I was in Sergio Marchionne’s office in Turin, winding down a long interview. At the time, the Italian-Canadian boss of Fiat and Chrysler was merging the two companies, reviving both of them.

I turned off the recorder and asked him what he wanted to do next – whether politics might be alluring. “I’ve thought about politics, but I would have to live in a bunker if I were prime minister,” he told me.

He explained that Italy was fundamentally uncompetitive and needed a top-to-bottom overhaul, one that would make him Public Enemy No. 1 as he took on the unions, the byzantine bureaucracy and judicial system, corrupt politicians, entrenched oligarchies and, of course, the Mafia. “They’d all try to kill me – that’s why I’d have to live in a bunker.”

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I always hoped Mr. Marchionne would take on the challenge, but he stuck to making cars and died in 2018. Today, Italy is still looking for its saviour – and may have found one in Mario Draghi, the former European Central Bank president who is on the verge of forming a national unity government.

This week, against all odds, Mr. Draghi won the backing of almost all of parliament’s main parties, a fractious crew that ranges from Matteo Salvini’s Euroskeptic, right-wing League party and Silvio Berlusconi’s old Forza Italia, to the anti-establishment Five Star Movement and the centre-left Democratic Party.

Their endorsement, which came shortly after the collapse of prime minister Giuseppe Conte’s second government, is an admission of the severity of the country’s twin crises: the pandemic, which has killed 93,000 Italians, and the worst recession since the Second World War. Their judgment is that Mr. Draghi is the best man to fix the mess, and they are happy to have him do the heavy lifting before insisting on elections.

Mr. Draghi is an Italian and European heavyweight. As ECB boss during the debt crisis years, he is credited with saving the euro from destruction – earning him the moniker “Super Mario.” Steady, direct, unemotional and multilingual, he enjoys the respect of Europe’s leaders, who will defer to his economic expertise.

The question is whether he can give Italy the overhaul Mr. Marchionne imagined was necessary to make the country a thriving, innovative economy, as it was in the postwar years, when Italians gave the world Ferrari, Vespa and world-class fashion brands. In other words, will he go for creative destruction or use spending to paper over the cracks?

Mr. Draghi will come under enormous pressure to turn Italy’s battered economy around, but all bets are off unless the pandemic, which shrank Italy’s GDP by 9 per cent in 2020, eases off quickly.

The health crisis won’t end unless most of the population is vaccinated. But no European Union country has full control over its vaccine supply. It was the European Commission, not the individual member states, that struck supply agreements with vaccine manufacturers. The EC moved too slowly, and supplies are running short. By the end of the week, the EU had administered just 4.4 doses per 100 people, well behind the vaccination rates of Britain and the United States.

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There is nothing Mr. Draghi can do to boost supplies. In that sense, the pandemic is largely out of his hands.

The good news is that he has some cash coming his way. Italy is in line for €210-billion of the EU’s €750-billion pandemic recovery fund, making it the biggest beneficiary. The headline figure is impressive, but there is less to it than meets the eye: The freebie amount of the Italian package is about €82-billion over several years; the rest is loans.

Given the size of Italy’s economy – bigger than Canada’s – the annual grant portion is little more than a rounding error. Still, it’s better than nothing, and Mr. Draghi will want to show the EU that he will spend it well on productivity-enhancing projects. If he does, the effort will vindicate the bloc’s most ambitious economic effort in decades and open the door to a second recovery fund to build on the momentum of the first.

But what Italy really needs is reform – lots of it. The country has one of the slowest judiciary systems in Europe, making contract enforcement difficult, and one of the most top-heavy bureaucracies. The World Bank’s latest Ease of Doing Business report ranked Italy 58th in the world; Kenya was higher. Rome has a terrible track record when it comes to spending EU structural funds efficiently.

The Italian economy is cluttered with protected guilds, such as pharmacies and taxi services, that make them largely immune from competition. Tax evasion is routine. Southern Italy is an economic wasteland, partly because of Mafia looting.

To make the country truly competitive, Mr. Draghi would have to cure these ills. But he is no miracle worker, and any proper overhaul would take a long time – he has just two years to complete his to-do list before the next scheduled elections. Unless he wants to live in a bunker, he may go down in history as the man who took a bad situation and made it only slightly better. Given Italy’s dire economic performance for decades, that would be enough to burnish his reputation.

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