A fateful vote in Italy – regression or progress

This year has already seen some fateful votes with surprising outcomes. The British decided in favour of Brexit and the USA for the experiment Trump. In a few days Italy is also facing such a fateful vote. And here, too, the country is deeply divided. A lot is at stake: Can Italy finally become governable?

On 4 December Italians are to vote on Prime Minister Renzi’s planned constitutional reform. The purpose of this reform is to make it easier to govern the country: at the moment, every law has to get through three readings in both chambers of parliament – the Chamber of Deputies and the Senate. Since in the past a government has seldom been able to rely on a majority in both chambers, proposed legislation has frequently been blocked or diluted. This perfect bicameralism has made it incomparably hard to govern Italy and has ultimately led to frequent changes of government. In the past, governments have regularly exhausted themselves in the struggle for political majorities. Since the end of the Second World War Italy has had 65 governments.

The reform aims to put substantial constraints on the rights of the second chamber, namely the Senate. In the future the new Senate is supposed to number 95 members made up of seconded representatives from the regional assemblies and mayors of large cities. Two life senators appointed by the President and former presidents would also be members of the Senate. At the moment the Senate has 315 members who are elected directly in the regions. If the Italians vote “yes” in the constitutional referendum, the size and powers of the second chamber would be significantly curtailed. The Senate would still be responsible for European questions, the protection of minorities and referendums and would also be entitled to vote on constitutional amendments. Legislation in all other questions would then fall within the purview of the Chamber of Deputies.

By reforming the electoral law – in the teeth of fierce criticism from the opposition and also from its own ranks – the Renzi government has already done the ground work needed to make it easier for a government to govern in the future. Among other things, the new electoral law assigns the winner a majority bonus: the strongest party gets additional seats if it attracts more than 40 per cent of the vote. In concrete terms, the winning party’s share of the seats in the Chamber of Deputies is automatically increased by 15 per cent so that it holds 55 per cent of the seats. If no party gets past the 40 per cent mark in the first round of voting, then a run-off election between the two strongest parties decides which party gets the bonus.

Renzi and his ministers have beat hard on the campaigning drum to convince Italians. But the population’s initially broad-based approval for constitutional reform has turned into a neck-and-neck race. What’s more, the opposition against the reform has recently even built up a slight lead. It needs to be borne in mind here that – depending on the opinion poll – undecided voters recently accounted for around one third of those eligible to vote. So the outcome of the election is open.

The approval of the Italian population for the constitutional reform is absolutely necessary if Renzi’s grand design for the reform of the political decision-making level is to be a success. The political opposition has already levelled hefty criticism at the electoral law reform. Especially the smaller parties have protested as they believe the reform deprives them of the chance to participate in the government in the form of a coalition. But there is also mounting resistance within the government’s own ranks. The opponents of the constitutional reform are attracting increasing support and their share of the vote has recently increased significantly.

In order to soften the resistance to the constitutional reform, Renzi has held out the prospect of possible amendments to the electoral law. In addition, the Italian Constitutional Court is yet to rule on the new electoral law. But the ruling is no longer expected before 4 December. So Renzi still has time to campaign for more support. However, Renzi’s biggest problem is that the opponents of the constitutional reform are seeking to use the referendum as a vote against the current government and not as a project that could put an end to the political stalemate in Italy.

If the referendum were really to attract a “yes” vote, then the political leeway it would create could really lead to a clean break for the Italian economy. Long overdue reforms in the legal system and the administration could then finally be taken on board, inefficiency and administrative curbs on productivity could be eliminated. More energy could be diverted into further structural reforms than into the struggle to obtain political majorities.

This would undoubtedly also create a positive stimulus for the business climate in Italy and could boost economic growth considerably. This is all the more important as the list of economic problems is long: these include low economic growth, weak productivity growth, high national debt, problems in the banking sector, low efficiency in the public administration.

However, if the reform is thwarted by the referendum, then Italy’s political and economic future is more than uncertain. New elections could not be ruled out and the resultant uncertainty could spoil the business climate with corresponding consequences for growth. From the European point of view a defeat for Renzi and an end of his grand reform project would also be problematic. Italy is the third-largest economy in the European Monetary Union and an end to the reform process that has been launched there could again cast doubt on the Monetary Union’s sustainability. If Italy is really to tackle its economic problems in the future it needs a stable government that has a greater capacity to act incisively and does not exhaust itself in political scheming as in former times. This is what is at stake in the referendum on 4 December.

 

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