ROME — Italians voted in
record numbers on Sunday to reject a series of proposed changes to the
Constitution.
Posters in Rome against Italy’s referendum featured a photograph of Prime Minister Matteo Renzi.Gregorio Borgia/Associated Press
Proponents of the changes,
including Prime Minister Matteo Renzi, said they would streamline Italy’s
cumbersome legislative process by eliminating two-thirds of the Senate and stripping
regions of power over crucial issues like transportation, energy and
infrastructure.
Critics, which included
populist groups, said the proposals would have concentrated too much power in
the hands of government.
What was the vote really
about?
The vote was widely considered
a referendum on Mr. Renzi’s nearly three-year-old government, although some
voters were genuinely displeased with the proposed changes.
Mr. Renzi had angered many Italians because of what
they perceived as a failure to stimulate economic growth and address
unemployment, and he was viewed by some as arrogant.
The most contentious proposal deals with changes to
the Senate, which would have become a mostly consultative body consisting of
regional and municipal officials.
But many constitutional experts wanted to preserve the
existing authority of the Senate as a check on the government.
Why did Renzi announce his resignation?
The prime minister’s resignation was necessary because
he had staked his political future on the referendum. He repeatedly stated that
he was in politics to affect change, not to “keep a chair warm.” When the
changes he wanted were rejected, he kept his promise to quit.
Mr. Renzi may be leaving the political arena, but
Sergio Fabbrini, director of the Luiss School of Government in Rome, predicted
that he would not be absent for long.
“Defeat for Renzi does not mean defeat in the long
term,” he said, noting that those who backed the referendum changes — about 40
percent of voters — formed what he described as a “party of the nation,” which
backed Mr. Renzi, who nonetheless faces a fight to maintain control of the
Democratic Party.
“It is a movement with a clear leader, a clear program
and a clear European outlook,” Mr. Fabbrini said. The opponents of the changes,
on the other hand, were a motley array of parties and movements that shared a
sovereign, Euroskeptic and anti-globalization vision, but perhaps little else.
“Apparently Mr. Renzi lost the battle, but the war is
still to be fought,” he said.
What happens now?
Mr. Renzi was expected to tender his resignation on
Monday. President Sergio Mattarella must now consult with Italian political
leaders and gauge whether there is enough support for a caretaker government
and under what terms.
In the short term, the budget must be passed and the
electoral law must be modified or completely overhauled. Mr. Mattarella might
appoint a caretaker government to remain in power until elections in the
spring. Or he might try to negotiate a longer-term solution, with elections in
2018, when the legislature is scheduled to end.
Antonio Polito, deputy director of the Milan-based
daily Corriere della Sera, said three people are in position to head a
caretaker government: Pier Carlo Padoan, Italy’s finance minister (“widely
respected in Europe”); Pietro Grasso, Senate president (an institutional choice);
and Dario Franceschini, culture minister (a Democratic Party heavyweight).
Would holding another election be a problem?
Yes, because Italy’s electoral law, the so-called
Italicum, which was approved in 2015, is under review by the constitutional
court.
The law calls for a two-round system, which gives the
winning party a majority bonus, but the law applies only to the Lower House,
and not to the Senate (which the referendum was supposed to partly eliminate).
The law gives the winning party a significant
majority, meaning that barring internal tussles, the winning party could rule
for an entire five-year term, which is unusual in Italy.
As a result, many parties oppose the law. The populist
Five Star Movement was among them, but it now wants the law to stand because it
is performing strongly in the polls.
Why is there so much uncertainty now?
The “No” vote has opened a period of economic and
political uncertainty in Italy and in Europe, each feeding into the other.
France and Germany, two other major European Union
members, are already scheduled to hold crucial elections in 2017, and the
addition of one in Italy would add to the uncertainty.
The referendum result in Italy could bolster
anti-establishment forces across the European Union, which is already
struggling to deal with the consequences of the Brexit vote.
Financially, although the markets were relatively calm
on Monday, there is concern about the long-term economic consequences of the
referendum.
The Five Star Movement has pledged to carry out a
referendum on whether Italy should remain in the eurozone if it comes to power,
potentially undermining the single currency’s stability and that of the wider
European Union.
Why are Italian banks at risk?
The stability of Italian banks, on the other hand, is
a more immediate and worrying issue.
Mr. Renzi’s government had been working on plans to
recapitalize Italy’s weakest banks, many of which are saddled with bad loans.
There were plans, for instance, to restructure Monte dei Paschi di Siena, one
of Italy’s most troubled banks and a linchpin of the financial system.
Now that Mr. Renzi is leaving, financial analysts
worry that the bank rescue efforts will collapse. That would turn away
desperately needed private investors and lead to a renewed and possibly
contagious financial crisis in Europe, where banks and financial institutions
continually lend money to one another.
Troubles in the banking sector weigh heavily on the
wider Italian economy and could create a vicious circle if economic stagnation
continues.
If more businesses and consumers struggle to pay their
debts, the number of bad loans could rise further and make it even more
difficult for banks to provide the credit businesses need to expand or invest.
The market interest rate, or yield, on Italian 10-year
government bonds has nearly doubled since August, to more than 2 percent, a
sign that investors are worried and consider the bonds to be increasingly
risky.
How does populism in Italy differ from other
countries?
Populist forces in Italy share a common anti-European
sentiment with their continental counterparts, but they are more heterogeneous
and have a longer history than elsewhere in Europe.
The Northern League has been riding the populist wave
for more than two decades on a right-wing, anti-immigration and protectionist
platform.
The Five Star Movement, which recently won mayoral
elections in Rome and Turin, is an internet-based group that draws support from
a much broader political spectrum.
It aims to sweep away Italy’s elites from positions of
power and replace them with regular citizens, and has repeatedly called for a
referendum on whether Italy should leave the eurozone. It is loath to make
political compromises, refusing to participate in coalition governments.
The political leadership of the movement is unclear.
While the comedian Beppe Grillo is the party’s ideologue and political
comptroller, the Five Star Movement’s candidate for prime minister is being
challenged by two young candidates, Alessandro Di Battista and Luigi Di Maio.
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