Europe’s shifting power balance: Draghi, Scholz and the Ukraine invasion

What a difference leadership makes. The leaders of Germany and Italy have offered contrasting examples of how to pursue a painful uncoupling with Russia.

Olaf Scholz and Mario Draghi are on the frontline of the EU's dramatic foreign policy shift spurred by Russia's invasion of Ukraine. Their economies – the largest and third largest in the euro zone – are heavily reliant on Russian energy. Scholz and Draghi's predecessors sought a rapport with Vladimir Putin and fostered economic ties. Severing these connections will hurt them more than most in the bloc.

But while the two men are following a shared path, one is wavering where the other is decisive. And this will have consequences for the balance of power within the bloc.

Scholz’s cautious approach has looked like reluctance to act. From the suspension of the Nord Stream 2 gas pipeline to EU embargoes on Russian coal and oil, he has pushed back before caving in. His multi-year €100 billion plan to modernise the German military has been overshadowed by hesitations over the more urgent question of supplying heavy weaponry to Ukraine. In an interview with Der Spiegel, he emphasised the nuclear escalation risks of doing so, only to send anti-aircraft tanks days later.

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Talking tough

In Rome, Draghi told Italians they needed to choose between “peace” and “air conditioning,” and, in an interview with Corriere della Sera, he confessed to doubts over the value of engaging with Putin. He has pushed for harsher EU sanctions and suggested a price cap to curtail the flow of gas revenues to Moscow.

In a speech to the European parliament he outlined an overhaul of the EU to achieve “pragmatic federalism”.

"Draghi is trying to conceptualise the role the EU should play in this crisis, while Scholz is focusing on the mechanics," Susi Dennison, senior fellow at ECFR in Paris, says.

"Draghi's narrative is about how Ukraine fights for democracy and freedom, while Scholz highlights the risks," her Berlin-based colleague Jana Puglierin adds.

Both leaders head disparate coalitions, but Draghi is helped by his stature abroad and popularity at home. He "sits one level above", Dennison notes. With no aspirations to seek another mandate, the 74-year-old former head of the European Central Bank is a "liberated man".

He uses the prestige he earned a decade ago as saviour of the euro zone to convince voters to accept a difficult path, says Enrico Letta, a former Italian prime minister and now head of the centre-left Democratic Party (PD).

After succeeding the long-serving Angela Merkel as chancellor last year, Scholz also has to manage a bigger shift, Dennison argues. "Italy was one of the more sympathetic countries to Russia, but Scholz is not only reversing the Merkel years in terms of sympathy to Putin, but also a long tradition of pacificism."

To be sure Draghi's decisiveness has not entirely suppressed Russophile or anti-Nato sentiment in Italy. Aside from president Sergio Mattarella and the PD, "the rest of the political system is either much more nuanced or opposed" to Draghi's pro-EU, Atlanticist views, Letta says.

“For now Putin is the bad guy but if this narrative changes, those parties could cause trouble” – and sway a population still unsure over how much it is willing to sacrifice to help Ukraine.

Power dynamics

Still, Draghi’s ability to turn a position of weakness into one of strength – and the difficulty Scholz has in doing so – is shifting the power dynamics within the EU.

The south, chastised by the north for its fiscal laxity and the danger it posed to the union a decade ago, has defied expectations, Dennison says. She points to southern and peripheral countries' ability to absorb Ukrainian refugees as well as show solidarity to other member states, such as Greece's offer to help Bulgaria after Moscow halted gas supplies to the latter.

In this crisis geography is playing to the south's advantage, Letta notes. Proximity to the Mediterranean – once a problem during the Syrian and Libyan refugee crises – now means access to more diversified energy supplies from Algeria and the Middle East.

While Scholz begins to come around, Germany’s internal difficulties could impede the running of the EU. It is increasingly absent from debates over what the EU’s new energy model should be while meeting its climate change goals, Dennison notes for instance. “It is quite worrying because European voters need strong leadership, a clear pathway as sacrifices will have to be made.” – Copyright The Financial Times Limited 2022