Italy's failed referendum

It is not necessarily the case that the rejected Italian referendum was a carry through of the Brexit or Trump effect. A general election in the spring, at the same time as the French one, could be when the real fireworks go off. Until then, Italy should muddle through

Matteo-renzi_2825899b
Another Italian prime minister bites the dust
Timwork
Tim Hedges
On 5 December 2016 22:01

It might be thought these days that the best way for a government to achieve change would be to put the matter to a referendum and campaign fiercely for the status quo, confident in the knowledge that the people would act against the government’s professed line.

Certainly, every referendum this century has gone against the expressed wishes of the European Union.

At lunch on the Sunday of the Italian referendum we were in a family run restaurant and I asked the father, not how he would vote, but what he thought about it all. ‘It’s a typically Italian thing’, he said, ‘needlessly complicated.’

Indeed, the question on the ballot paper ran to more than 50 words and the subjects covered were many and intricate.

As far as I can make out,’ said my friend, ‘we’re screwed if we vote yes and screwed if we vote no.’ And this, according to my limited vox populi, was about as close and erudite an analysis of Italian opinion as you can get.

I am not at all sure that Italy’s referendum was a part of the 2016 Brexit-Trump anti-establishment wave, on the day when Austria voted the establishment way. I think it’s an Italian thing. There are two reasons for this view.

The first is that this was called and organised in a cack handed way. Renzi needed to stop his reform packages getting batted backwards and forwards between the upper and lower houses. There are many more reforms in the pipeline to cope with vital economic modernisation and if there are not changes they will not get enacted.

If Renzi had limited his referendum package to this, he might still have had difficulty, but at least he could have focussed debate on this issue. Instead, there was a host of other issues, such as the quorum required in a vote, the powers of the regions, and so on, some of which people liked, some of which they didn’t.

Then Renzi, overconfident of his popularity, turned it into a personal matter, putting his prestige behind it and promising to resign in the event it failed. It was asking for trouble.

The second reason I do not think this is part of a trend is that Italy has been going against the establishment line for quite some time. Berlusconi, who came to power in 1994, was a vote against the establishment, replacing and destroying the Christian Democrats who had been in power almost constantly since the war.

When Berlusconi was ousted by Angela Merkel, he was replaced by the most sensible, the most establishment, of men, university rector and former European Commissioner Mario Monti. Italy got rid of Monti as soon as it could, in the 2013 election.

At this time Italy needed a new president and the establishment dream, former Prime Minister and President of the European Commission Romano Prodi indicated he would be ‘prepared to serve’. He was roundly rejected.

The party which got most votes in the 2013 election was the ultra-iconoclastic 5 star movement which does not even call itself a party and makes its policies by popular vote, on the computer. They are still favourites to win the next general election.

The Italians know all about fighting the establishment and had Renzi been a wiser man he would have remembered this and not put his head on the block. So what happens now?

The capital raising for troubled Monte dei Paschi bank may not now go ahead, in which case it will be nationalised. Small investors will be compensated, legally or not. Mario Draghi at the ECB will buy Italian bonds and manage the euro.

The President, Sergio Mattarella, will probably appoint an interim government tasked with getting us into the spring, after which there will be a general election, perhaps at the same time as the French one, a disaster shared being a disaster halved.

Don’t worry about Italy. It has a tradition of muddling through. The EU has a tradition of kicking the can down the road. It will be all right. Until the next time.

Tim Hedges, The Commentator's Italy Correspondent, had a career in corporate finance before moving to Rome where he works as a freelancewriter, novelist, and farmer. You can read more of his articles about Italy here

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