A Five Star turn over Rome

Hardly has there been a recent period without turmoil in Italy’s political system, but there is something exceptional in the waiting weeks before the referendum of December 4.  With expedient tours, audacious speeches, tactical manoeuvres and political rattling, prime minister Matteo Renzi has been trying to convince Italian men and women to back his constitutional amendments, pleading for the need of a “strong government” – or perhaps too strong whatsoever – in a country that finds itself in a “critical crossroads”. Despite his notable popularity, his premiership is in a tight spot not least because of the salient presence of the Five Star Movement (M5S), led by Beppe Grillo, which meanwhile has been favouring fresh – even younger than Renzi – faces, like 30 year-old MP Luigi Di Maio. The latter has been said to be a strong candidate of M5S for the elections of 2018 (or earlier…).

What the referendum is about

The Italian constitutional amendments, proposed by prime minister Matteo Renzi and largely compiled by his Reform minister, Helena Boschi, intend to:

  • Drastically reduce the role and power of the Senate, decresing its members from 315 to 100, which will not be directly elected but chosen by the regional bodies. The Senate’s mandate is then non-binding any more (except for constitutional matters), allowing the government to exercise power only through controlling the parliament.
  • Abolish the provinces system.
  • Neutralise the National Council of Economics and Labour.
  • Transfer a great share of authority from the 20 regional administrations of Italy to the central government, such as the control of infrastructure tenders.

Beyond opinion polls

As it is widely known already, most opinion polls have been pinching the governmental campaign, showing a “No” result lead from 1 to 3.4 per cent, thus rejecting the constitutional changes. The highest rate “Yes” has got – notwithstanding Barack Obama’s endorsement in October – has been around 35-37 per cent, against 38-41 per cent for “No”.

Yet the reasons Italian citizens do not respond so positively to Rome’s appeal have actually less to to do with oppositional arguments that the proposed amendments are undemocratic or authoritarian. An unemployment rate of almost 12 per cent and youth unemployment of 40 per cent, as well as meagre economic growth appear to be more palpable culprits. In fact, most Italians who are voting “No”, they’ll be doing in essentially to taunt Matteo Renzi and his government, without necessarily grasping or having a special interest in the constitutional changes he speaks for. October’s surveys (TECNÈ 24 ottobre 2016) suggest that only 17 per cent of Italians would consider themselves fully familiar with the content of the referendum vote; 46 per cent claim they understand it superficially and 37 per cent not at all.

The rejection then of the Italian prime minister’s plans by the electorate will come to a protest vote by its own nature; an expression of a desire for change, whatever that might be, as well as of the declining allure of the Italian Democratic Party (PD).

From the referendum to two Itexit scenarios

Mr Renzi has repeatedly stated he would resign if he loses the referendum, something that would likely lead to early elections in a few months. Nevertheless, even he remains in place, the political hit to the Democratic Party would surely benefit the Five Star Movement.  Indeed, Beppe Grillo’s party stood far behind from PD last year, lagging 12 points, while in October this distance was half that amount. The same pollsters saw a gap of 4 points in November, giving 31-32 per cent to PD, compared to 27-28 per cent for M5S, and even an advance for the latter back in September (31.4% against 31.1).

That said, either the next legislative elections take place in 2018 or earlier, M5S has a strong chance to win them and proceed with its political programme, which pledges for withdrawal from the eurozone and the European Union.

But things are even more perplexed for Rome. The proposed diminishing of bicameralism in Italy through the essential neutralisation of the Senate is politically and structurally bound to the recently changed electoral law – the Italicum – that came into force in July 2016. The Italicum dramatically boosts the majority bonus system that exists in Italy. Combined with the constitutional amendment, it introduces a “winner takes all” model, as it was aptly called by the Italian Press. For it provides 15 per cent bonus to the party that passes 40 per cent, thus giving the first party 340 seats of the total 630 (absolute majority). If no party receives more than 40 per cent,  a second round follows between the first and the second party, and the winner of the elections takes 340 seats no matter their percentage. The threshold for entry in the parliament is 3 per cent.

What should be noted is that the Italicum cannot be implemented as it is, if the referendum fails to pass the constitutional amendment, since it was designed on the basis of a dominant lower house.

Therefore, Rome finds itself in a paradox:

• If Matteo Renzi loses the referendum, the Five Star Movement of Beppe Grillo will reap a political triumph that will allow it to gain momentum in the elections too, even if those are to be conducted according to the previous electoral law.

• If Renzi wins the referendum, there is no guarantee his popularity will cease to decline, due to a frail economy and a banking system on the verge of explosion. In this scenario, an election defeat of PD will bring in a reinforced M5S government, quite thanks to the reforms of Renzi himself.

And this is explains why the Italian government has been tirelessly struggling to convince the people vote for its plans and sustain support to the Democratic Party at the same time.

Renzi raises his stakes

In the midst of a formidable political situation, the 41 year-old Italian leader goes all out defying Brussels – and by extension, Berlin – both at and away home:

• Firstly, he insists on his veto threat against the approval of the European Union 2017 budget, having called for greater spending oriented in employment and the refugee crisis management. Sandro Gozi’s comments, the Italian under-secretary for European Affairs, were indicative of Palazzo Chigi’s intentions: “We are not nationalists and we are not populists, but we are tired of European ambiguities and contradictions. We are very tired of a Europe that says things and does not do them. We are convinced that if Europe does not change, this will mark the beginning of European disintegration.” Naturally, diplomatic circles at the Commission consider the veto case to be an effort of the Italian government to hit the headlines at home, and that it is unlikely to disrupt the process. Indeed, on 29 November, when the Council of the EU adopted the bloc’s budget, Italy abstained, along with Greece and the United Kingdom. Still, Mr Gozi has confirmed Italy will maintain its veto on the review of the multiannual budget (2017-2020) that will take place in mid-December.

• Secondly, the team of experts of the Finance minister of Italy, Pier Carlo Padoan, has come up with a so called growth-friendly, socially fairer government budget for 2017. It includes 3.5 per cent tax cuts for corporations, summing to 20 billion euro, a boost of 7 billion euro for pensioners who earn less than 1,000 euro, a rise in health spending amounting to 2 billion euro, an extra 4.5 billion for infrastructure repairs and reconstruction of the towns and villages that were hit by the earthquake, as well as 3 billion euro in expenses related to the refugee crisis. Although the funds are supposedly coming from a reduction in administration spending, from capital repatriation and the dissolution of the notorious, costly tax agency Equitalia, the budget produces a deficit of 2.3 per cent, well and much above the target of 1.8 per cent that was agreed with the EU Commission. Beppe Grillo has perpetually borne the mark of the populist, but it was Renzi who bawled out about “not letting some European technocrat tell me that I cannot restructure schools. The budget won’t change”.

At this point, the anger of European… technocrats for Renzi’s audacity is all but apparent, especially when they have already conceded in exempting the refugee issue costs and the earthquake damages from the structural deficit calculations. And still, in sight of the crucial referendum on 4 December, the executive body of the EU Commission decided to postpone the assessment of the Italian budget for 2017, as it would be certain to find it breaches the Stability Pact rules. All for not inflaming Renzi’s predicament.

Campaign in the South

The reality is that the governing party is bound to more or less follow the EU Commission’s dictations, hence it can hardly express the working class interests and the wish for change in the Italian society, either of the parts inclining to the left or to the right. It’s no coincidence that in the South, a region severely hit by the economic crisis and the fiscal discipline policies, the difference between “Yes” and “No” at the referendum polls has reached 11 per cent. This has prompted Renzi to rush in the South, with successive visits to Sicily, Sardinia, Campania (Naples) and Puglia. He’s also suggested tax cuts for new businesses that create jobs in these regions, while he’s even dusted out the old plan to connect Sicily with the mainland, as part of several infrastructure improvement proposals. Last but not least, the Sicilian city of Taormina has been selected to host the G7 Summit in 2017.

In the end, it is doubtful whether all these will actually lure the electoral behaviour of the Southern Italians, given that it’s a group of the population with strong democratic reflexes and an innate resistance to power centralisation…

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