In Italian referendum, Matteo Renzi goes all in

Final polls show half the electorate are still undecided or intend to abstain

Shakers and makers across the globe, including Barack Obama and Angela Merkel, will be keeping a close eye on the outcome of a critical Italian constitutional referendum that takes place on Sunday.

Matteo Renzi, Italy's dynamic, change-driven, centre-left 41-one-year-old prime minister, has proposed a series of reforms intended to both streamline and stabilise government.

Renzi's opponents are suspicious of his proposals, arguing that all he is doing is looking for more executive power for the prime minister.Italian judge and constitutionalist Gustavo Zagrebelsky calls it "a swing from democracy to oligarchy".

On the other hand, the "markets", the world's business community and Obama and Merkel are all behind the proposals,. For these international players, even more important than the plans themselves is the possibility that a No vote could threaten both the euro and the European Union itself.


Italian voters, caught between a constitutional rock and a hard economic place, seems unsure which way to go. Opinion polls have been banned for the last 15 days of the referendum campaign, but the last ones available show that about half of the electorate were either undecided or intending to abstain.

Even the most sympathetic observer of modern Italy is likely to conclude that this is a country that could do with a major overhaul of its political system.

Most people are familiar with the “revolving door” aspect to Italian politics, which has seen 63 governments in the past 70 years. Yet how many know that the last time Italians actually elected a prime minister, rather than have him imposed on them by presidential nomination, was in 2008 with the election of media tycoon Silvio Berlusconi?

The last three prime ministers (Mario Monti, Enrico Letta and Renzi) were essentially placed in the hot seat thanks to some distinctly Machiavellian manoeuvres from, among others, then president Giorgio Napolitano. Renzi himself, a former mayor of Florence, was not even a parliamentarian when he was appointed prime minister in February 2014.

School enrolment down

The rot is not confined to politics. Take Italian universities. According to research body Fondazione Res, the number of university enrolments is down by 20 per cent. That may be because, given the difficulties of the byzantine university system, about a third of those who enrol drop out.

Worse still, those with university degrees are far more likely to be unemployed than those who quit school or never attend college, primarily because the latter are more willing than graduates to work without contracts in unskilled jobs.

Or take women. Not only do Italian women, on average, earn 15 per cent less than men but, while 67 per cent of men are employed, only 47 per cent of women have jobs. Italy is also a country where too many women live in life-threatening situations. By the end of November, 116 women had been killed this year in domestic violence attacks, most often by a husband, an ex-husband or ex-boyfriend. That means, roughly one killing every three days.

The economic outlook doesn’t seem especially rosy either. The Italian economy has been “stuck in a moment” for 20 years. Unemployment is 11.6 per cent (youth unemployment is 36.4 per cent). At €2.2 trillion euro, the national debt stands at 132.7 per cent of GDP, it highest ever. The 2016 current growth rate, according to the OECD, is a modest 0.8 per cent.

You’d think voting for change that might kick-start the economy and modernise the country would be a no-brainer. But not to everyone; final opinion polls show the No vote slightly in front, because many Italians are wary of Renzi’s motives.

With the 20-year reign of Mussolini still in living memory, Italians remain wary of any tinkering with a 1948 constitution that put in place various checks and balances aimed at preventing the return of Mussolini-style dictatorship.

Essentially, the referendum calls for the elimination of Italy’s two-chamber parliamentary system; the reduction of the numbers of parliamentarians (currently 945); and more central government say in regional affairs.

Privileged positions

Critics argue that this simplification of politics and acceleration of decisionmaking is undemocratic. But Renzi strenuously defends his reform package, claiming that the “motley crew” of those opposed to it are resistant to change and determined to hold on to their positions of privilege.

That they are a "motley crew" is beyond doubt. The three main opposition forces – the anti-immigrant Northern League, the Five Star Protest Movement, and Silvio Berlusconi's Forza Italia party – would have difficulty agreeing the time of day. They are united only by their differing shades of Euroscepticism.

Economists worry that a defeat for Renzi would result in his resignation, followed by market panic, soaring bond spreads and Italian banks going down like dominoes in the resultant crisis. It might also bring one of the eurosceptic parties to power.

However, the real worry is that voters will make their decision not on the issue in hand but on how they view Renzi himself. He claims that in his first 1,000 days in office, he has delivered  respectable growth (1.6 percent), a 3 per cent recovery in household spending, lower unemployment (down by half a percent) and healthier public finances (budget deficit lowered by 0.4 per cent). Yet, people do not feel better off because of such figures.

The consequences of that public feeling could be far-reaching.