Italy: Growing Political Uncertainty

26.12.2016
As is well-known, Italians voted in the referendum on constitutional reform on December 4 and most politicians are still trying to understand the real reason that lead the electorate to reject the ‘yes’ to changes proposed by Matteo Renzi. The prime minister and leader of the centre-left Democratic Party who had transformed the vote in a sort of plebiscite on his mandate had to resign. And a less volcanic caretaker chief of government – former minister of foreign affairs Paolo Gentiloni – has taken his place, with a declared mission to give the country a new, viable electoral law. Also he promised to ensure the regions struck by the recent earthquakes get the necessary funds and that Monte dei Paschi, the oldest bank in the world and the third largest in Italy, wouldn’t sink into a final bankruptcy that could have enormous consequences on the sector, including in Europe. The idea is that quiet and loyal Gentiloni could accomplish his mission in a few months, then everybody go to the polls, as most of the opposition is asking, invoking the will of the people and the need to give the country a ‘really elected’ government, what Matteo Renzi wants as well.

The fact is that Italians has not voted to elect a new parliament since 2013 and Renzi came to power in 2014 forcing his party colleague Enrico Letta to resign. Now many electors are claiming their right to choose their delegates and therefore a new government. And if it would be wrong to transform the outcome of the constitutional referendum in a poll for general elections, the clear majority who voted ‘no’ (59,1%) has galvanized opposition parties like the Northern League of Matteo Salvini and the anti-establishment Five Star movement (M5S) of the former comedian Beppe Grillo. Both, together with Silvio Berlusconi’s Forza Italia and other minor opposition parties, were against the reform promising a new composition of the Parliament as well as the balance of powers between the State and different administrative entities. Both sent the message: vote no, if you want Renzi’s government to go home. On the other side, after his gamble failed, the former prime minister now hopes to transform the 40,1% votes for the changes into votes for his leadership and come back with a solid electoral mandate. Someone must be necessarily wrong between the two parts.

The fact is that it is impossible to translate in an electoral forecast the results of a referendum proposing constitutional amendments written in a hasty way as a concentrated solution to all the problems of the country. Its’ enough talking to friends, relatives and colleagues, to realize many voted ‘yes’ fearing economic doom or the rise to power of populistic forces, mainly MS5, but at the same time many rejected the referendum because they thought the proposed reforms would take less benefits than drawbacks. A huge part of the electoral, then, simply used the referendum to express its dissatisfaction, fears for the future and growing skepticism in the political elite. Finally, a good part of the ‘no’ votes were explicitly against Renzi, his policies and his leadership, often described as “arrogant”. That means that a good part of the Italian electorate refused the changes because they are asking for real changes.

The result in political terms is, at the moment, a “non result”. The country has not seen the financial disaster especially feared in Europe in case of a ‘no victory’ and the new government is a photocopy of the previous one. But now comes the difficult part, regardless of the referendum outcome.

First of all, in terms of urgency, if not importance, the banks: Monte del Paschi is trying to secure a private bailout and the state is ready to intervene, raising questions about Renzi unwillingness to do it before, dangerously postponing the outcome of a crisis that has risen shockwaves in Italy and alarm abroad. Moreover, the Tuscan bank is not the only one in trouble, as smaller institutes are also struggling to survive. The sector is fueling a growing mistrust among common people and skepticism among investors. Second: the state debt, well above 130% of the GDP, keeps growing and if Italy is ‘too big to fail’ we can expect real troubles once the European Central Bank stops pumping money into the Eurozone economy. Third: Italy’s GDP is stuck in low growth, the labour market is seriously arthritic and the reform operated by Renzi, the so called ‘Jobs act’, may become the object of a new referendum next year, a new foreseeable ‘no’, considering a substantially steady unemployment rate over 11% and disastrous percentages among the young.

Polls suggest that an election today, right now, would give The Five Star movement a real chance to become the biggest party in Italy and its leaders are increasing a call for another yet referendum, on the euro, signaling that an exit from the European single currency would be a central issue in the campaign for the next election. Leaving the euro is presented as an opportunity to regain monetary sovereignty and competiveness, but it would not be so simple, and could become the final act of the Eurozone altogether. The anti-immigrant, very euroskeptic Northern League also wants a referendum, and it wants it about a full exit from the European Union. But the Italian constitution does not allow to ditch international agreements through referendum and Italians, according to the polls, still think EU is a better option than going it alone. Moreover, the anti-establishment M5S is facing a corruption scandal and an administration paralysis in Rome, its local government flagship, forcing Beppe Grillo to admit the party has made serious mistakes and finding it harder and harder to picture itself as “different” from other traditional parties. The crisis in Rome is overshadowing the political victory against Renzi’s referendum.

So, what next for Italy? “If you want things to stay as they are, things will have to change”, suggests Giuseppe Tomasi Lampedusa in its beautiful and despairing Leopard (Il Gattopardo), published in 1958. It is as true of nowadays Italy. On the inner front, much depends from the electoral law that will emerge from two different systems now on the table: a mixture of majoritarian and proportional system could become a real obstacle to the Five Star Movement hopes and a renewed invitation to traditional alliances and compromise between political forces. But in times of Brexit, of huge migrations, of growing uncertainty feelings and absence of solid economic recipes for the future, change could be soon unavoidable in Italy, too. And it could be hard, really hard changes.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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