'Quitaly': Populists ready to turn Italian politics upside-down

Next Sunday, Italian voters will go to the polls to vote on controversial changes to their constitution.  The vote will determine if far-reaching changes are made to Italy's upper chamber of parliament, transferring much of its power to the central government.

But the referendum has taken on far more importance than the reforms citizens will be voting on.  When Prime Minister Matteo Renzi introduced the measure, he foolishly promised to resign if the constitutional changes were not voted in.  Up to that point, ther referendum had the support of about 70% of Italians.  But once Renzi made that promise, populist opposition parties pounced and successfully turned the referendum into a vote on Renzi's performance in office.

Support for the reforms collapsed, and it now appears likely that Renzi will lose his gamble, and the referendum will go down to defeat.  That leaves open the possibility that a new government will be formed by the Five Star Movement and Lega Nord – two populist parties that want a referendum on Italy keeping the euro as its currency. 

Needless to say, there is panic in the rickety Italian banking system, where at least eight banks could need a bailout an impossible task with Italy carrying a debt burden of more than 130% of its GDP.

Meanwhile, the Five Star Movement, led by the Trump-like insult-throwing comedian Beppe Grillo, has become the main opposition party to Renzi's P.D. party.  If Renzi follows through with his threat to resign if he loses the referendum, it may leave an opening for Grillo and other populist parties to force another vote on whether Italy should keep using the euro thus the term "Quitaly" that defines the near certainty that Italy's rejection of the common currency would cause a continent-wide earthquake leading to the destruction of the EU.


A defeat for Renzi will be read as a victory for Italy’s two major populist parties: the Lega Nord and the larger Five Star Movement, led by the comedian Beppe Grillo. The two parties are not allied, but both are nurtured by anti-establishment sentiment and favor “national solutions” to Italy’s problems – beginning with a return to the Italian lira.

If Renzi is defeated, Lega Nord and the Five Star Movement could join forces to support a new government and hold a new referendum – this time on the euro. If Italy – one of the world’s largest public debtors – decided to go it alone, the entire European project could be dealt a mortal blow. In the age of Donald Trump and Brexit, that outcome is far from unthinkable.

The issue at stake in the referendum is not inconsequential, but it should not decide the fate of Europe. Italians will vote on whether to strip the Senate (the parliament’s upper house) of two-thirds of its members and much of its legislative authority, making it merely a talking shop akin to the second chamber of Germany’s Bundesrat, and return some of the regions’ powers to the central government.

Changes like these have been discussed for 30 years. The lack of movement could benefit Renzi, if voters conclude that they should not waste such a rare opportunity to do something to reform their sclerotic system. President Sergio Mattarella is impartial, but he would prefer that the reforms go forward. His predecessor, Giorgio Napolitano, is also strongly in favor of the reforms, which he sayswould be “great news for Italy.”

But the reforms have also faced stiff opposition. Some state institutions dislike the idea of delivering more powers to the executive branch; magistrates, for example, fear a loss of judges’ extensive and unchecked powers. Then there are the new populists, several PD old-timers, and plenty of other establishment figures, including several former members of the constitutional court, who generally fear change. Former Prime Minister Silvio Berlusconi, ever the opportunist, is also opposing the reforms.

The opposition, as usual, benefits considerably from its simple message. To vote “no” is to vote against the “system” and all of its corruption. Who is not against corruption? Add to that rising Euroskepticism, and the result is an intoxicating political brew. Opinion polls now indicate a 5-6-point majority for No, with 20% of voters still undecided.

The chances that Grillo and the Five Star Movement will be asked to fashion a governing coalition if Renzi resigns are small.  Before that happens, some sort of technocrat government will be cobbled together until elections are held in 2018.  But there's no telling what will happen between now and then.  Some Italian observers believe that elections could be held as early as next year, in which Grillo's Five Star Movement  started on his blog may emerge as the leading vote-getter, or at least as a kingmaker whose support would be vital to any other party that wants to govern.

No matter what happens, the populist wave is now washing over Italy, the third largest economy in the EU, with untold repercussions that the government and people will have to deal with.