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Euro meltdown

Since the refounding of the Italian republic in 1946, the office of Prime Minister has changed hands 40 times – the average term in office for an Italian Prime Minister is around one year and nine months. Contrast that with the post-war averages of British Prime Ministers (four years and nine months), French Presidents (six years and four months) or German Chancellors (seven years and five months) and you get an idea of quite how much instability has afflicted Italian politics. Factor in that some Prime Ministers managed to stay in power while changing the composition of the Governments they led, and it looks even worse: there have been 65 Italian Governments in the last 70 years.

There are a variety of reasons for this trend. The shifting sands of Italian party politics, and an electoral system which encourages fragmentation into small parties, requires governments to paste together often fragile coalitions. The violence of the anni di piombo, the years of lead, added further tension to an already fractious politics. And widespread corruption eventually led to the Tangentopoli (‘Bribe City’) scandal of the mid-1990s, which destroyed several of the country’s main political parties. Issues of culture, conflict and crime made Italy hard to govern, and made many of its politicians incapable of governing with each other – a political disaster in a coalition-based system.

The Italian constitution, though, also bears some of the blame. While Westminster’s bicameral system clearly grants the Commons primacy and far greater powers than the Lords, Italy’s parliament has two houses of equal clout, the Chamber of Deputies and the Senate. This arrangement is known as “perfect bicameralism” – a euphemism, given its effect on Italian governance is far from perfect. Both chambers must approve a law for it to be passed, and if the Senate is dissatisfied then it can bat any proposal back to the Deputies eternally. Any government therefore requires a majority in both houses, which are elected at the same time but have different compositions, due to different electoral rules, different constituencies and different voting ages (18 for the Deputies and 25 for the Senate). Put simply, the potential for gridlock is huge.

The peculiar history of how this system came to develop – via a series of messy compromises – is laid out here on the blog of the UCL Constitution Unit.

For some years there has been a growing feeling at the top of Italian politics that the arrangement is unsatisfactory and even unworkable. Various attempts have been made to agree and introduce constitutional reform, but each has failed.

The latest such attempt is going to be judged in a referendum on Sunday.

Matteo Renzi, elected as Italy’s youngest ever Prime Minister in 2014, brought forward wide-reaching proposals which would, among other things: replace the Senate with a much smaller chamber composed of appointees from local and regional government; strip the Senate of the right to block large portions of legislation, thereby placing the Chamber of Deputies firmly in charge; abolish a layer of regional government; and give greater powers of initiative to allow voters to force referendums. At the same time, he is introducing a new electoral system which seeks to offer greater stability by giving a top-up bonus of seats to the biggest party over a certain threshold (this isn’t subject to the approval of the referendum but is part of his reform programme nonetheless).

The backlash

Renzi’s ambitions certainly aren’t modest. The question is whether it is within his power to fulfil them. He steered the proposals through the Italian Parliament, but failed to secure the super-majority required to pass them straight into law. As a result, they must secure popular approval in this week’s referendum.

If he thought he could separate the twin problems of Italy’s fractious politics and its broken constitution, he seems to have been mistaken. The referendum has become about Renzi and the wider political class as much as it is about the specific reforms. To the horror of a Prime Minister who claims he is offering to reduce both the number of politicians and the cost of politics, the programme has become the focus for an anti-politics campaign.

British readers will find the themes and arguments familiar from the rise of anti-politics in the UK: the main parties are accused of being almost identical, clubbing together to grant themselves more power at the expense of the people. Bolted onto criticisms of the specifics of Renzi’s proposals are numerous other concerns and frustrations felt by voters who feel ignored and neglected by a political class which prioritises its own interests ahead of those of the people.

The No campaign is a fascinating patchwork. Insurgents like Beppe Grillo’s Five Star Movement line up with Silvo Berlusconi’s Forza Italia, the radical rightists of the Liga Nord find themselves on the same side as the Tory-allied Conservatives and Reformists (named in tribute to the ECR Group in the European Parliament), and all of the above are joined by the Greens, two different brands of Communists and the Italian Left.

It seems to be working. Yes was well ahead at the start of the year, but No took the lead in June and was still out in front in the final polls before the official blackout on polling came into force last weekend. We all know by now that polls can be wrong, but they are certainly in with a chance.

How did Renzi’s big shot at reform come to this?

The proposals themselves are partly responsible. As The Economist notes, while “perfect bicameralism” is certainly broken, instituting an unelected upper chamber whose members are immune from prosecution looks like an invitation for the most corrupt politicians in the land to seek a seat in the new Senate. And the top-up electoral system, intended to put an end to the need for coalitions, was always going to attract opposition from smaller parties who stand to lose clout, and suspicion from voters who fear a power-grab by Renzi or someone worse.

Renzi’s strategic mis-steps have played a large part, too. He opened the door to accusations of a political stitch-up by relying on Berlusconi’s support to push the reforms through, irritating some in his own party. Having taken the pain of striking that deal, he then lost Berlusconi’s support through a dispute over his nominee for the Presidency. As a result, the No coalition now includes Berlusconi and various members of Renzi’s own party who initially chose to support No precisely because they disliked the sight of their leader doing a deal with Berlusconi.

That wasn’t his worst error. As his opponents settled on an anti-politics message, bundling not only the issue of electoral reform but also general discontent with the political class into the debate, Renzi offered them the ultimate gift: he pledged to quit politics if he lost. In our EU referendum, David Cameron denied he would resign if we voted Leave lest the prospect tempt Labour voters into doing so. Faced with the same choice, Renzi tried to use his resignation as a threat but inadvertently handed an attractive message to the No campaign.

There’s more at stake than constitutional reform

If the polls are right, and No triumphs on Sunday, the stakes are rather greater than simply the future of the Italian constitution. In the short-term, there are fears that the fall of Renzi’s Government could push several Italian banks off their precarious perches, requiring a multi-billion euro bailout to save them. That in itself would place renewed economic and political stress on the Eurozone, which is yet to shake off the hangover from its last crisis.

There is also the question of who would come after Renzi. Italy has a long tradition of the main parties installing technocratic governments in times of crisis, but a defeat on this scale could strip them of their authority to do so. If anyone stands to gain in stature from a No vote, it’s Grillo and his M5S. They want a referendum on Italy’s membership of the Single Currency – were they to gain power, even as part of a coalition which prevented that referendum from happening, it would be another crack in the already rickety EU wall.

A new crisis for the EU

To pre-empt lazy headline writers: an Italian No vote wouldn’t be the same as Brexit. For a start, while many Italians are using the referendum as a proxy to express their dislike of their political elite, they aren’t quite so far along the Eurosceptic road as Britain (yet, at least). But it would have a dire impact on the European project: reopening the currency and banking crises which the ECB hoped were over, highlighting once again the resentment between the North and South of the EU’s core, inspiring politicians across the Continent to wonder if the EU really is the best bandwagon to hitch their career to and, perhaps, pulling back the curtain to reveal that the whole edifice is far less secure and stable than its leaders like to pretend.

For the UK, any economic instability in our close neighbours and trading partners is bad economic news. The political impact at home could yet be sizeable, too. It is common to hear some people assert that the first whiff of an economic crisis would lead Leave voters to regret their decision. What doesn’t seem to have been considered is the effect that the sight of a specifically EU economic crisis would have.

If the EU’s grandest project wobbles, Brussels would be forced to seek yet more money from member states to fund yet more bailouts. Juncker et al would no doubt demand a response involving “more Europe” in the form of Banking and Fiscal Union – as they always do. The cost and popular discontent would rise as democracy and the economy declined. In that circumstance, it could be Remain voters who find themselves thanking the stars for our lucky escape from a doomed experiment.

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