No third way

04.12.20161,248

Matteo Renzi proposes two options about Italy’s future and both are not perfect. Credits: Reuters

On Sunday, Italy will decide if it wants to make the biggest change of its Constitution since it became a republic in 1946. What is at stake is not only the modification of 44 out of 139 articles of the constitution. The referendum is also a confidence vote on the main proponent of the reform, Prime Minister Matteo Renzi. But whatever the outcome of the vote, Italy will face a great deal of uncertainty.

‘There is a climate of civil war,’ said TV presenter Maurizio Crozza, emphasizing the unusual social polarization sparked by the election. ‘Renzi’s jump without a safety net,’ wrote columnist Massimo Gramellini in La Stampa.

Some 47 million Italians are called to say yes or no on the reform that, in its most well-known point, proposes the end of the so-called ‘bicameralismo perfetto’, a perfectly symmetric bicameral parliament, where currently the upper house (Senate) and the lower house (Chamber of Deputies) share nearly equal powers.

Renzi proposes the suppression of this equilibrium. In fact, if he wins, the Senate would become a more regional body with fewer senators (from 319 to 100). And the Chamber of Deputies would be the only institution to process and approve the vast majority of laws, including a confidence vote on a new composition of government or a declaration of war but excluding new constitutional laws and European treaties.

‘I do not know if citizens will vote ‘yes’ because a lot of them do not understand it properly. It’s a very complex reform,’ explains Raffaele Bifulco, a constitutional law expert at Rome’s University Luiss. ‘What I believe is that Europe and the world are expecting Italy to demonstrate that it is capable of taking decisions that could make it better off,’ he adds and argues that while the reform is not ‘magical or perfect’, it is mainly positive because it modernises the Italian state.

Political calculations

The referendum was announced in September. Since then opinion polls have regularly painted a dark picture for Matteo Renzi. It is forbidden to publish the findings 15 days before the vote and the last surveys put the No campaign 5-6 points ahead.

However, the result remains subject to domestic and international factors. The recent sociological mistakes during the UK referendum and the US presidential election make analysts cautious about giving outright predictions. What adds to the level of uncertainty is the anticipated high abstention—although there is no legally binding threshold—and a large proportion of undecided citizens. Finally, only 8% of the respondents consider the referendum a priority for the country.

Against the backdrop brought by the outcomes of the UK referendum and the US presidential election, a possible victory of Matteo Renzi’s proposal would mean that it is possible to turn back the populist tide. Even though this scenario would be a great relief for European leaders, many in Italy are not happy with such an outcome.

Since the parliament passed the reform last April, the camp of its opponents has been growing. Contrary to their initial support, right-wing parties later joined the chorus of the politicians from populist and xenophobic parties Five Star Movement (M5S) and the Northern League, who stand against the changes. Among them is Forza Italia, the battered party of former prime minister Silvio Berlusconi. Parties and citizens’ movements see the referendum as a factor that could strengthen the positions of Matteo Renzi.

‘I will vote ‘no’ because otherwise it would give too much power to the prime minister and I am against that,’ explains Antonella Bresso, a citizen from southern Calabria.

Economic calculations

On the other hand, a victory of the No campaign would unlock a chain of events ranging from Renzi’s resignation, dissolution of parliament and new elections. This would see Italy plunge into a long period of stock market speculations and potentially a new wave of economic downturn, the Bank of Italy warns.

‘Financial markets do not like uncertainty, which has recently increased not only in Italy. They are concerned about the reforms [carried out by the government of Matteo Renzi over the last two years],’ said Economy Minister Pier Carlo Padoan, in an interview with Il Corriere della Sera.

The day after Donald Trump’s victory in the US, Italian bonds fell to the worst result among Eurozone countries. ‘If Matteo Renzi, the Italian prime minister, loses his constitutional referendum on December 4, I would expect a sequence of events that would raise questions of Italy’s participation in the eurozone,’ writes Wolfgang Münchau, a commentator for The Financial Times.

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