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|The real threat to Matteo Renzi is Beppe Grillo and his ilk|
Financial Times - November 30, 2016
Everyone wants to list Italy’s constitutional referendum on December 4th as the next stage in the Great Global Populist Revolution. But here’s a funny thing: among the campaigners for “no” are not only the insurgent Five Star Movement led by comedian Beppe Grillo but also establishment figures such as Mario Monti, a former prime minister, and many members of the Democratic Party, the keystone of the current government.
Blame Benito Mussolini. For if Italy’s current prime minister, Matteo Renzi, wants to win his referendum against the polling odds he is going to have to deal convincingly with the ghost of il Duce during this final week’s campaigning.
The mistakes that Renzi, who in 2014 became Italy’s youngest prime minister since unification in 1861, has made with this referendum begin with his decision earlier this year to declare it a personal make-or-break. Given Italy’s chronic lack of economic growth, unemployment of 11.7% of the workforce and stagnant household incomes, the verdict on his government’s record cannot be other than negative.
He is having to campaign on promises of bringing change and better times that might have worked in a general election two years ago, had he had the guts to call one, but are much less convincing now – whether or not they are true. But he has a second, even bigger weakness: to bring about change his constitutional reforms stand to concentrate much more power in the hands of the prime minister than Italians have been accustomed to since the days of Mussolini, which would make the prospect of a Five Star government even scarier.
Some, like Monti, are opposing that concentration of power because they don’t like or trust Renzi. Others, because they fear Grillo. Either way, the omens for December 4th look poor.
It is far too late to row back on most of this. Mr Renzi’s plan to strip the Senate of most of its powers, replacing the elected upper house with one filled by appointees mainly from regional assembies, makes sense. The country’s perfect bicameralism allowed plenty of laws to be passed, but delayed or blocked fundamental reforms. It also makes sense to abolish the largely redundant and duplicative provincial governments, which just complicated the life of city mayors and regional governors, and added to the potential for corruption.
Each element of the plan makes sense, a decision to shift decision-making on big infrastructure projects up to central government especially so. The trouble is that once all the reforms are added together they represent a thorough stripping away of checks and balances. As a way to get things done, this has appeal. But the old trope about Mussolini getting the trains to run on time comes to mind.
In fact, the biggest source of worry is not even on the referendum ballot: a new electoral law for the Chamber of Deputies, passed last year, which is designed to ensure that the winning party can gain an absolute majority. This naturally appeals to Mr Renzi, who has governed for the past two years through a rickety coalition. But it also represents the greatest chance of the Five Star Movement getting into government and being able to implement its demand for a referendum on Italy’s euro membership. It is what makes the loss of checks and balances so dangerous.
The moment such a euro referendum were called – actually, probably the moment Five Star formed a government – Italian bond markets would go crazy, most likely bringing about a new banking crisis and potentially blowing up the whole single currency.
In September, Renzi hinted that he would reconsider the electoral law after winning on December 4th. Yet few believe him. If he is to stand a chance of overturning his current big deficit in the polls, he needs to make a clear and credible promise about this.
The electoral law delivers a big “majority premium” to the winning party in a second round of voting, reducing the incentive to form coalitions. It would be better to abolish the second round and either eliminate the majority premium or offer it only above, say, a threshold of 40% of the votes. That would favour coalitions – which Five Star is hard-pressed to form.
Defeat on December 4th will not bring Five Star to power immediately. No election is required until February 2018. Most likely, if Renzi quits or is defenestrated, he would be replaced by another Democratic Party bigwig or a technocrat. But then, too, the key task will be to reform the electoral law. Otherwise il Duce Grillo would become a real prospect. And that would be no joke.