Will
Italy be Europe’s next casualty as Renzi risks all on referendum?
Matteo
Renzi’s pledge on constitutional reform is starting to look as
ill-starred as David Cameron’s Brexit poll
Stephanie
Kirchgaessner in Rome
Saturday 6 August
2016 21.00 BST
Matteo Renzi has
never seen himself as a short-term prime minister. Months after he
assumed power in 2014 in a daring intra-party coup that would have
made Machiavelli proud, Renzi addressed the fact that he was the
fourth prime minister Italy had seen in three years.
“I don’t know if
it’s a good or a bad thing, but I think that you won’t see any
more for a few years,” he told the Observer at the time, smiling.
The centre-left leader saw himself – and was widely regarded – as
a dynamic force capable of reforming Italy after two decades of
sclerotic politics. When his Democratic party crushed the opposition
in European elections that year, it seemed that – like Silvio
Berlusconi, the former conservative prime minister – Renzi would be
around for a while.
Today the future
looks considerably less bright, and less assured, for the former
mayor of Florence. In a few months, probably in November, Italians
will head to the polls to vote in a referendum on a constitutional
reform that Renzi says will make it easier to pass legislation by
dramatically restricting the powers of the senate, a major source of
political gridlock.
But whereas as
recently as a few months ago a win for Renzi seemed likely, things
are suddenly a great deal more complicated. And when the Italian
prime minister contemplates the fate of David Cameron, consigned to
political history after his own ill-starred referendum, he must feel
distinctly queasy.
Much like Brexit in
the UK, the referendum is increasingly being seen as a way for
Italians to air their general discontent with the establishment, in
large part because Renzi swore that he would leave politics if the
referendum did not go his way. If he loses his gamble, the results of
the referendum could have vast consequences for Italy and the whole
of Europe. A defeat could potentially open the door to a new national
election that could see the Eurosceptic, populist Five Star Movement
push the Democratic party out of power.
“I think, as with
every referendum, the Italian constitutional referendum will not only
be fought over the substance of the legislation, but a whole number
of issues will come to play, and one of those will be the banking
crisis,” said Vincenzo Scarpetta, a political analyst with Open
Europe.
Italy has been
grappling with its troubled banks, whose problems have dominated the
news all summer and have provoked worries of a major bank failure. A
plan to save the country’s third largest lender, Banca Monte dei
Paschi of Siena – which recently found to be the weakest lender in
Europe-wide bank stress tests – has not won the full confidence of
investors. In order to avoid a bailout by the government, which would
have disastrous political consequences for Renzi and potentially wipe
out thousands of Italian savers, the bank has found a “market
solution”, requiring it to raise at least €5bn in private
capital. But there are doubts whether it will be able to convince
investors to fork out the capital.
The big question now
is whether worries about the banking sector, coupled with anger over
the economy’s slow growth and concerns about the ongoing migration
crisis, will pose a further risk to Renzi’s chances of winning the
referendum in the autumn. One possible silver lining, according to
Scarpetta at Open Europe, is that the deadline for MPS to raise the
funds will probably fall after the date of the referendum, allowing
Renzi to “kick the can down the road” one last time.
Analysts say one
thing is clear: the usually confident Renzi made a big error when he
decided to stake his own political career on the vote. Much to his
chagrin, the vote is beginning to resemble a national election –
something which, thanks to the manoeuvring that got him into power,
he has never personally won. In 2014 Renzi elbowed out prime minister
Enrico Letta in a tussle for power within his own Democratic party.
“Since he took
office in February 2014, his original sin has always been that he
never fought a general election,” said Scarpetta. “Now we are
seeing a clear change in tack and rhetoric, with him saying ‘this
is not Renzi’s referendum, it is just a referendum’. It may be
too little, too late.”
If he wins, Renzi
will have been chastened but ultimately vindicated by the vote. But
if he loses, the reality of Italian politics is that no one is quite
sure what will happen. Under one scenario, a caretaker prime minister
would take over until the next national election. In another, the
president of Italy, Sergio Mattarella, would call new elections,
paving the way for a possible win by the Five Star Movement, which
has in the past called for a referendum on the use of the euro and is
generally Eurosceptic. While the Movement is not considered a staunch
opponent of immigration, the party’s founder, comedian Beppe
Grillo, has expressed admiration for Nigel Farage, the former Ukip
leader, for his stance against Brussels.
Renzi recently
acknowledged the risks Italy is facing, telling CNBC: “We’re in a
situation where perhaps the Five Star Movement are allowed to lead
this country. The people need to understand what voting ‘no’ here
means: we learnt that in the UK.”
The prime minister’s
big miscalculation, said Scarpetta, was that he believed that the
constitutional reform was a top priority for Italian voters who were
eager for change. “First, it is clear that for many Italians, the
priority is returning to economic growth. The second is that, by
personalising the referendum, he has united all the opposition
against it,” Scarpetta said.
Gianni Riotta, the
former editor of Sole 24 Ore, a leading business newspaper, said he
believed Renzi could still eke out a victory. “Yes, I predict he
will win, even in this mess,” he said. “I have faith in Italian
common sense. Before he wins, he has to fly a little bit lower, eat a
little crow, try to mend fences with his former enemies, and realise
he cannot do it all alone.”
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