Renzi faces pres­sure to stay in of­fice

Kuwait Times - - ANALYSIS -

When a hand­ful of Euro­pean lead­ers met Barack Obama in Ber­lin this month to say their good­byes, Ital­ian Prime Min­is­ter Mat­teo Renzi in­formed the group that he may well lose power be­fore the US pres­i­dent. While Obama leaves of­fice on Jan 20, Renzi has promised to re­sign if he does not win a Dec 4 ref­er­en­dum on con­sti­tu­tional re­form, open­ing the way for re­newed po­lit­i­cal in­sta­bil­ity in the eu­ro­zone’s third largest econ­omy. “I have no de­sire to hang around if I lose,” Renzi told the gath­er­ing, ac­cord­ing to a diplo­matic source who was at the lowkey Nov 18 meet­ing.

Opin­ion polls now pre­dict Renzi’s de­feat, in what would be the third big anti­estab­lish­ment re­volt by vot­ers this year in a ma­jor Western coun­try, fol­low­ing Bri­tain’s un­ex­pected vote to leave the Euro­pean Union and the US elec­tion of Don­ald Trump. Pres­sure is mount­ing on Renzi to drop his threat and in­stead agree to re­main in power to deal with the fall­out from a ‘No’ vote, in­clud­ing the risk of a full-blown bank­ing cri­sis.

Obama him­self said in Oc­to­ber that Renzi should “hang around for a while no mat­ter what” and a num­ber of busi­ness­men and se­nior govern­ment of­fi­cials con­tacted by Reuters said they feared the worst if the prime min­is­ter aban­doned his post. “My per­sonal opin­ion is that Renzi should stay,” In­dus­try Min­is­ter Carlo Cal­enda said in an in­ter­view on Fri­day. “What needs to be con­sid­ered ... is what is good for the coun­try.” Three cen­tre-left politi­cians who are in reg­u­lar con­tact with Renzi told Reuters that he would honor his word and im­me­di­ately re­sign if he is beaten, wor­ried that fail­ure to do so would do ir­repara­ble dam­age to his po­lit­i­cal im­age.

Im­pul­sive

The Ital­ian pres­i­dent could ap­peal to Renzi’s sense of re­spon­si­bil­ity and ask him to seek a new man­date from par­lia­ment. His re­sponse might de­pend on the size of any de­feat, with one ad­vi­sor say­ing the 41year-old premier could quit pol­i­tics al­to­gether if he suf­fers a huge snub next Sun­day. “He is young and im­pul­sive,” said the of­fi­cial, who de­clined to be named. “If the re­sult is ter­ri­ble, he might de­cide to call it a day and do some­thing else with his life.”

The ref­er­en­dum pro­poses con­sti­tu­tional re­forms to strengthen the lower house of par­lia­ment and re­duce the au­thor­ity of the up­per house Se­nate. Re­gions would lose some de­ci­sion-mak­ing pow­ers to bol­ster cen­tral govern­ment. Renzi says the pro­ject is nec­es­sary to make Italy, which has had 63 gov­ern­ments since 1948, gov­ern­able enough to en­act re­forms needed to re­vive its mori­bund econ­omy. Op­po­nents say it would re­duce demo­cratic checks and bal­ances.

In the first week in De­cem­ber, Italy’s third largest bank Monte dei Paschi di Siena has to launch a Ä5 bil­lion ($5.3 bil­lion) cash call. In­vestors are not ex­pected to jump in if po­lit­i­cal in­sta­bil­ity pre­vails, mean­ing the state will al­most cer­tainly have to in­ter­vene swiftly to stave off col­lapse. Although busi­ness lead­ers sup­port Renzi’s re­forms, they have kept quiet dur­ing the ref­er­en­dum cam­paign, fear­ing they would prove the kiss-of-death in an era of anti-es­tab­lish­ment angst.

But they are in­creas­ingly alarmed by the prospect of heav­ily in­debted Italy drift­ing once more into po­lit­i­cal paral­y­sis. “I am afraid that if he loses the ref­er­en­dum (Renzi) re­ally will give up,” Fer­ruc­cio Fer­rag­amo, chair­man of fash­ion house Sal­va­tore Fer­rag­amo, told Reuters. “Italy can re­act to any­thing, but this re­ally would be a step back.”

No Safety Car

Opin­ion polls can­not be legally pub­lished in the fi­nal two weeks of cam­paign­ing, but the last 40 sur­veys re­leased be­fore the Nov 18 cut-off showed the ‘No’ camp ahead by up to 11 per­cent­age points. A source in Renzi’s Demo­cratic Party (PD) said on Fri­day that pri­vate polls sug­gested this gap had closed to five points with a quar­ter of vot­ers still un­de­cided, mean­ing vic­tory was still pos­si­ble. Ini­tially the plan was backed by 70 per­cent of Ital­ians, but when an over-con­fi­dent Renzi said at the end of 2015 he would re­sign if de­feated, op­po­si­tion par­ties turned the ref­er­en­dum into a de facto bal­lot on his 2-1/2 years in of­fice.

His record is mixed. De­spite many re­forms, Italy is set to have the third low­est growth in the 28-na­tion Euro­pean Union in 2016 and the sec­ond low­est next year, ac­cord­ing to EU fore­casts. Unem­ploy­ment is stuck above 11 per­cent and wages are stag­nant. A loss would pro­vide more ev­i­dence of voter fury in Europe ahead of elec­tions in France and Ger­many next year. And Renzi’s exit could ben­e­fit pop­ulist ex­co­me­dian Beppe Grillo, who wants to ditch the euro cur­rency and whose Five Star move­ment won more than a quar­ter of the vote in Italy’s last gen­eral elec­tion in 2013.

Renzi ac­knowl­edges that per­son­al­iz­ing the vote was a mis­take and in Au­gust he changed tack, re­fus­ing to dis­cuss his fu­ture while on the cam­paign trail. But with polls show­ing no sign of re­cov­ery, the prime min­is­ter has dou­bled down on his orig­i­nal threat over the past two weeks. “I’m not will­ing to take part in old-style po­lit­i­cal games. Ei­ther we change or I have no role to play,” Renzi said this month - a line he reg­u­larly re­peats at the fren­zied round of ral­lies and me­dia in­ter­views he is un­der­tak­ing be­fore Dec 4.

If he quits, it is not im­me­di­ately clear what would hap­pen next. The straight­for­ward an­swer would be for Italy to hold na­tional elec­tions a year ahead of sched­ule. But Renzi was so con­fi­dent of vic­tory in the ref­er­en­dum that he in­tro­duced a new elec­toral law in 2015 just for the lower house, be­liev­ing the Se­nate would no longer be in play. To avoid us­ing dif­fer­ent elec­toral sys­tems for the two houses, par­lia­ment would have to de­vise a new elec­tion law, which could take much of 2017.

Pres­i­dent Ser­gio Mattarella, the supreme ar­biter of Ital­ian pol­i­tics, could ask Renzi to over­see this re­form as head of a so-called “sin­gle-pur­pose govern­ment”, but the prime min­is­ter’s al­lies say he would never agree to such a limited man­date. “Renzi can’t serve as a safety car,” PD law­maker Mat­teo Richetti told Reuters, re­fer­ring to the car that takes to the track af­ter ac­ci­dents in For­mula One motor rac­ing. If Renzi is not pre­pared to be a fig­ure­head leader, govern­ment of­fi­cials con­tacted by Reuters said Econ­omy Min­is­ter Pier Carlo Padoan or Se­nate speaker Pi­etro Grasso were the most likely can­di­dates to step into the breach.

Padoan, a for­mer of­fi­cial at the In­ter­na­tional Mon­e­tary Fund, would be seen as par­tic­u­larly mar­ket-friendly in what are likely to be tur­bu­lent times. But a Padoan or Grasso govern­ment could not take of­fice with­out Renzi’s bless­ing, be­cause it will need the back­ing of his PD party to sur­vive. Renzi’s al­lies fear he will be held re­spon­si­ble for its ac­tions even if he is not prime min­is­ter.

“All those who are de­mand­ing a ‘No’ vote should sup­port a govern­ment that pre­pares the way for elec­tions. But that won’t hap­pen. They are go­ing to cre­ate an almighty mess and ex­pect us to clear it up,” said Richetti. — Reuters

A de­mon­stra­tor holds a plac­ard pic­tur­ing for­mer Cuban Pres­i­dent Fidel Cas­tro dur­ing a “C’e chi dice NO” (some say no) rally in cen­tral Rome on Sun­day call­ing to vote “no” in the up­com­ing ref­er­en­dum fo­cused on con­sti­tu­tional re­form.

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