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Steering The Eurozone Through A Rising Storm


European Union leaders will meet again tomorrow to grapple with the sovereign debt crisis. One likely item on the agenda: the role of European Central Bank in solving the mess. On November 1st, it will have a new president, Mario Draghi, currently head of Italy's Central Bank. He's an American-educated economist with impeccable international credentials.

But as NPR's Sylvia Poggioli reports, little is known about the man who will steer Europe's Central Bank, or ECB, through the crisis.


SYLVIA POGGIOLI BYLINE: A few hundred young people stage a sit-in outside the Bank of Italy. Playing off the name of its president, many wear dragon masks.

UNIDENTIFIED MAN: (Italian language spoken)

SYLVIA POGGIOLI, BYLINE: A man with a loudspeaker says, the ferocious dragon is going to impose tough austerity on all of Europe. But we, the Draghi-rebels, want change.

UNIDENTIFIED MAN: Global change, global revolution, we are the 99.

POGGIOLI: The rally was part of a new global youth movement from Spain's indignados to occupy-wall-street in the U.S. The next day, Draghi sided with the young. It's understandable, he told an Italian daily, they're blaming their lack of prospects on the world of financial speculation that has no rules.

It was an extraordinary statement for a man who's very reserved. Among many achievements, Draghi was the architect of Italy's massive privatization program in the '90's, executive director of the World Bank, and managing director for Goldman Sachs International. He got his Ph.D. in economics at MIT.

His classmate, economist Francesco Giavazzi, says it's thanks to what he learned there that Draghi is not dogmatic.

FRANCESCO GIAVAZZI: He has kept a very analytical way of looking at problems. I mean, he is a problem solver. He knows how to deal with practical issues, but his approach to a problem is always analytical so his training as a good economist at MIT has not disappeared.

POGGIOLI: To win the ECB post, Draghi had to overcome two challenges. The French government was suspicious about his connection with Goldman Sachs which advised Greece on some questionable transactions. Draghi has repeatedly denied being involved in the operation. And Berlin was skeptical an Italian - whose country is one of Europe's most indebted - could embrace Germany's strict austerity and anti-inflationary policies.

As the eurozone crisis worsened, in July Draghi criticized some of the measures used to manage the crisis as partial, temporary, and stoking market uncertainty.

MARIO DRAGHI: (Through Translator) It is now necessary to give certainty to the procedure for handling sovereign crises by clearly defining the political objectives, the instruments and the volume of resources. This is needed to ensure the stability of the area and its currency.

POGGIOLI: A Recently, Draghi has stressed the urgency of growth. In particular, says business reporter Stefano Feltri, through welfare policies for the young and public spending.

STEFANO FELTRI: He is not frightened from inflation like German, he understands that you cannot solve this financial crisis without growth, because cuts and austerity are a solution, but only for the first time. If you want to find a real solution, you need that your GDP start to grow.

POGGIOLI: Draghi is faced with a double whammy - a sovereign debt crisis and a banking crisis - while European leaders dither. His former MIT classmate Giavazzi says the new ECB chief may find inspiration in how the U.S. handled an earlier crisis.

GIAVAZZI: We will have an ECB that will be more similar to the Bernanke Fed, which is a Fed that gave infinite liquidity to the financial system to avoid a collapse in '08 and '09, while in Europe there was a discussion about how much liquidity one should give.

POGGIOLI: Lack of European fiscal integration is seen as the major obstacle to resolving the eurozone crisis. Navigating the minefield of European divisions and rivalries will be the ECB chief's biggest challenge. But Draghi has ably remained above Italy's Byzantine political fray and shown he's the consummate consensus-builder.

Sylvia Poggioli, NPR News, Rome.


RENEE MONTAGNE: You're listening to MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.

Sylvia Poggioli is senior European correspondent for NPR's International Desk covering political, economic, and cultural news in Italy, the Vatican, Western Europe, and the Balkans. Poggioli's on-air reporting and analysis have encompassed the fall of communism in Eastern Europe, the turbulent civil war in the former Yugoslavia, and how immigration has transformed European societies.