Reform gamble backfires as voters reject the establishment, euro and EU
WHAT happened? Matteo Renzi called a referendum on reforms to Italy’s constitution, to strengthen the government and reduce the power of the upper house of parliament. Ironically perhaps, the changes were designed to increase stability and bring an end to the political merry-go-round, which has seen more than 60 governments hold office in the past 70 years.
Crucially, Renzi announced he would resign if the “Si (“Yes”) camp lost, turning the vote into a verdict on his leadership of Italy.
Why did voters want to get rid of Renzi? The centre-left leader of the Democrats was quite popular when he came to power as Italy’s youngest prime minister aged just 39 in 2014.
But his labour reforms – intended to inject vigour into a weak economy – provoked massive protests, while GDP growth remained sluggish, unemployment high and illegal immigration unstoppable.
Opponents encouraged voters to use the referendum to express anger not only at Renzi’s rule but also at the “establishment”, the EU and the euro. Who led the “No” camp?
While Si was backed by parties from the traditional mainstream of Italy’s politics, No attracted an array of insurgent groups from all parts of the political spectrum.
The anti-establishment Five Star Movement of comedian Beppe Grillo was joined by the far-right Northern League, the socialist Italian Left and the nationalist Brothers of Italy. Media tycoon and former premier Silvio Berlusconi threw his Forza Italia party into the battle for a No vote. So what happens next?
President Sergio Mattarella has asked Renzi to delay his resignation until parliament passes a budget law this month, then he will remain in office until a successor is appointed. Opposition groups, including the Five Star Movement, are pushing for an early election.
But it is more likely Mattarella will ask another senior Democrat to lead a caretaker administration until scheduled polls in early 2018.
Finance minister Pier Carlo Padoan is favourite to take over.
Changes of government without elections are not unusual in Italy and Renzi himself took power without a public vote by forcing out predecessor Enrico Letta.
What does this mean for the EU? Currency jitters. Europe has taken changes of government in Rome in its stride, but Renzi’s fall comes at a moment of massive instability, already reeling from long-running crises over migration and the single currency when it was delivered a body-blow by the UK’s Brexit vote.
Anti-EU campaigners are already agitating for the country to follow Britain’s lead, with French Front National leader Marine le Pen declaring that the Italian people had “disavowed the EU”.
But, while Eurosceptic, neither Five Star nor the Northern League have so far advocated withdrawal, so in the short term at least, Italexit – or Quitaly – looks unlikely.
What about the euro? Turmoil in the single currency zone’s third biggest economy had an immediate impact on the euro, which tumbled to $1.05 (R14.30) in the wake of Renzi’s announcement of his resignation.
Many Italians blame their slow emergence from the 2008 economic crisis on membership of the single currency and Five Star has been calling for a referendum on a return to the lira. Commentators are keeping a close eye on Italy’s banks, many burdened by bad debt, and may struggle to find refinancing amid political uncertainty. Is it just Italy?
Next year will see a string of elections across the EU in which populist movements are hoping to shake the established parties.
French President François Hollande already said he will not stand in the election, expected to pit the farright Le Pen against the Thatcherite Francois Fillon. The right-wing populist Freedom Party of Geert Wilders is leading polls ahead of the Dutch parliamentary elections in March, and even Germany’s Angela Merkel is facing an upsurge in support for the anti-immigration Alternative for Germany as she seeks re-election. By this time next year, it looks likely that Merkel will be one of only a handful of EU leaders left of those who ruled the roost at the start of 2016. And with Donald Trump replacing Barack Obama in the US, the Western world will have undergone a virtually unprecedented shake-up. Are there any exceptions from the tide of populism?
As Italy was voting No, neighbouring Austria rejected the eurosceptic candidate of the right-wing Freedom Party, Norbert Hofer, in rerun presidential elections.
But the EU-backing new president Alexander Van der Bellen is hardly any more of an “establishment” figure, as Europe’s first nationally-elected head of state from a Green Party. – The Independent