Mario Draghi — saviour or executioner?

“Draghi bends” to the German will, protests ABC. The President of the European Central Bank has made any intervention by the ECB in the debt markets conditional on a request from Spain and Italy for help from the European financial stability funds. And the German government and central bank want this support to come attached with firm policy measures under European supervision. For the conservative daily, Mario Draghi is “a reflection of EU powerlessness” —

The card game that the ECB seems to be playing on the instructions of the Member States of the North is totally unacceptable at a critical moment like the one we’re currently going through. [...] For the euro to be truly ‘irreversible’ [the word used by Draghi], it must be supported by strong and credible institutions under clear and decisive leadership – qualities that the ECB has not shown in the crisis.

El País feels that “the ECB is pushing Spain towards another bail-out.” The centre-left daily believes that Mario Draghi now has “all the powers” —

He has used all the expectations generated [by his statements of last week] to exert remote control over all the significant moves in European policy over the coming weeks. One: Spain will have to carry out all the reforms imposed by Europe and ask for a humiliating second bail-out [following the bail-out of its banks]. Two: Italy will benefit indirectly from the Spanish rescue, but it is highly likely that it will also have to ask for a bail-out itself when its political situation has been clarified. Three: the European partners must give their go-ahead to both these life-jackets with no additional strings attached that turn out to be exceedingly burdensome politically. And four: if all goes well, Germany and its Bundesbank will drop their ultra-Orthodoxy and give a free hand to the ECB. Finally, all power to Draghi – a kind of new Richelieu of continental policy. [...] The manoeuvre has just one problem: it continues to build on this quixotic fallacy that the South must continue to cut spending before confidence will return.

In Italy, Corriere della Sera notes that the “Draghi cure lets down the markets”. But for the daily, “this misunderstood manoeuvre, will, however, be useful,” and the markets are wrong —

Draghi has given all he could give, in safeguarding the autonomy of the ECB, given the political and institutional constraints of today's Europe. [...] First, without committing to specific actions, the President of the ECB has not shut the door to future interventions. Moreover, he reminds politicians of a crucial truth: the opportunity and the demand for a bail-out, with its pleasant and unpleasant consequences, are not the responsibility of the ECB but of governments and their constituents.

“Draghi shows prudence, markets fall,” writes La Stampa. For the Turin daily, though, the fault does not lie with the President of the ECB —

There is too great a mismatch between the impatience of the markets and the time it takes to come to political and economic decisions: the markets should be less nervous and politicians swifter [...] The attempt, suggested and expected by many, to smother the spread [the gap between interest rates on Italian or Spanish debt and German debt] and the complex disorders of the eurozone with the ECB bazooka would have allowed the celebrations to go on for a few days, maybe weeks, but at the price of serious disappointments to come. And if the ECB were to neglect the role of the other EU institutions, it would reduce their credibility, and not to the ECB’s benefit.

In Germany, Handelsblatt worries that the ECB president is “under the control of the markets” and is being pushed to intervene to buy up debt, while the [Financial Times Deutschland writes approvingly](http://www.ftd.de/politik/europa/:ezb-sitzung-draghis-weiser-plan/70071809.html#utm_source=rss2&utm_medium=rss_feed&utm_campaign=/politik [03/08/12 16:27:37] Carolin Lohrenz: http://www.handelsblatt.com/meinung/kommentare/ezb-draghi-wird-zum-getriebenen-der-maerkte/6953944.html) of a “very neat compromise.” The Süddeutsche Zeitung welcomes, moreover, the dual strategy of Draghi, “who acts as the president of the euro that the monetary union needs but does not yet have” by abandoning the role of a simple “guard against inflation” to become a “bold actor”, like Alan Greenspan, the former head of the U.S. Fed —

His big challenge is to explain to the citizens of Southern Europe that he will not help them if they do not radically overhaul their economies. Thursday, he chose the smart “both ... and” strategy. He spoke of bond purchases, but only if governments meet the conditions. That is to say: the money is not free – that would be fatal for the German taxpayer.

De Volkskrant is sceptical, writing that Draghi has “undermined his credibility” because he apparently did not meet the expectations raised by his earlier speech. The Dutch newspaper, though, does grasp his position.

He does not have the ultimate means to resolve the crisis in the eurozone. With all kinds of palliatives like buying bonds or transferring cheap money to the banks, he would be merely combating the symptoms of the crisis [...] In the end, it is the European politicians who have the key to the solution. The crisis can be averted only if the strong countries are ready to underwrite the problematic countries completely, and if they are willing to give up their sovereignty.

In Vienna, Die Presse notes that “the ECB is paralyzed by the power struggle over the financial assistance”. For the centre-right daily, the loser is Berlin, which is “fighting almost desperately to impose 'the union of stability’”. Thinking of the ruling that the German Constitutional Court should make on Sept. 12 [on the European Stability Mechanism, MES] and of the 59 percent of Germans who approve Angela Merkel’s policy on the crisis, it expects the Bundesbank and the Chancellor will stick to their firm “No” to the large-scale purchases of government bonds and the granting of a banking license to the MES —

Germany, however, is becoming increasingly isolated. [In addition to the U.S. Secretary of Treasury Timothy Geithner and the still very Germanophile Prime Minister of Finland Jyrki Katainen], the new French president and the prime ministers of Italy and Spain are currently building a new axis to construct a counter-pole to the austerity policy prescribed by Germany.